Market Overview

A Perfect Play For Prime Day With This ETF

A Perfect Play For Prime Day With This ETF Inc.'s (NASDAQ: AMZN) Prime Day kicks off Monday, July 15 and is a two-day celebration of one of America's favorite hobbies: retail consumption.

By essentially all accounts, Prime Day will eclipse previous records and do so easily — and that is likely one reason why shares of Amazon are up nearly 34% year-to-date.

What Happened

With the stock trading over $2,000, Amazon is not approachable for many retail investors. Fortunately, there are some exchange traded funds with such large weights to the e-commerce giant that they act as adequate proxies on the name.

That includes the ProShares Online Retail ETF (NYSE: ONLN). ONLN allocates roughly 25% of its weight to Amazon, one of the largest weights to the stock of any U.S.-listed ETF.

In an indication that big weights to Amazon are indeed effective when the stock is soaring, ONLN is up 27.1% this year.

Why It's Important

Data indicate there is long-term allure with ONLN.

“Online sales still only make up about 12% of total global retail sales,” ProShares Global Investment Strategist Simeon Hyman said in a recent note.

“Even as global e-commerce sales doubled over the last five years to about $2.8 trillion annually, the rapid adoption of online shopping is likely to continue as more global consumers start using mobile devices and gain handheld access to the internet.”

ONLN, which turned one year old last week, tracks the ProShares Online Retail Index, a benchmark that emphasizes retailers selling their wares through channels beyond brick-and-mortar stores.

ONLN's recipe works: it is beating the oldest traditional retail ETF by a margin of better than 5-to-1 this year.

What's Next

While ONLN makes for one of the ideal ways of profiting from Prime Day ebullience, data confirm the fund has a place in longer-term, tactical portfolios too.

“More than 340 million people have become digital shoppers since 2014, adding to a population that is expected to surpass 2 billion people by 2020, a 19% increase from [the] current level,” according to ProShares.

“By 2020, online sales are expected to pass $4 trillion, and the biggest players are widely expected to capture a major share of the growing pie. Amazon is projected to account for half of all online sales by 2023.”

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Posted-In: e-commerce Prime DayLong Ideas News Sector ETFs Retail Sales Trading Ideas ETFs Best of Benzinga


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