Market Overview

IBUY Online Retail ETF Lands Morningstar's 5-Star Rating

IBUY Online Retail ETF Lands Morningstar's 5-Star Rating

The Amplify Online Retail ETF (NASDAQ: IBUY), the first exchange traded fund dedicated to the e-commerce/online retail theme, has earned a five-star rating from Morningstar, the highest rating the research firm applies to ETFs.

What Happened

IBUY earned the five-star rating from Morningstar based on its risk-adjusted performance against nearly 50 competing consumer cyclical funds through May 31, 2019.

The fund debuted in April 2016 and tracks the EQM Online Retail Index. That benchmark “is a globally-diverse basket of publicly-traded companies that obtain 70% or more of revenue from online or virtual sales,” according to Chicago-based Amplify ETFs.

Why It's Important

While the growth of e-commerce and online retail has prompted the creation of several competitors to IBUY, the fund remains one of the dominant names among next-generation retail ETFs with $271.3 million in assets under management.

More importantly, IBUY has delivered strong returns, dominating traditional retail ETFs in the process. Since coming to market on April 20, 2016, IBUY is up 91.4%, as of June 12, while the SPDR S&P Retail ETF (NYSE: XRT), the largest traditional retail ETF, is lower by 4.4% over the same period. IBUY's annualized volatility over that period has been only slightly higher than XRT's.

Interestingly, IBUY's stellar performance has been mostly accrued without significant exposure to Inc. (NASDAQ: AMZN). The largest U.S. e-commerce company is a member of IBUY's lineup, but it has rarely been among the fund's largest holdings.

Current top 10 holdings in the ETF include Stitch Fix Inc. (NASDAQ: SFIX), Etsy Inc. (NASDAQ: ETSY) and eBay Inc. (NASDAQ: EBAY).

What's Next

Online retail has plenty of tailwinds and robust long-term growth expectations that can investors can tap via IBUY. The online retail story is not confined to the U.S., something Amplify recognizes. In January, the firm launched the Amplify International Online Retail ETF (NYSE: XBUY), IBUY's international counterpart.

XBUY's components must derive 90% of sales from e-commerce or online venues, a stricter requirement than IBUY member firms must reach. Home to 46 developed and emerging markets stocks, XBUY follows the EQM International Ecommerce Index.

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