After being postponed from July due to the coronavirus pandemic, Amazon.com, Inc. AMZN Prime Day started Tuesday at midnight Pacific time. This year's version of the online retail festival will last 48 hours — meaning that prior records will likely be toppled.
The e-commerce giant will discount a staggering 1 million items over the course of two days, but it's not as if Amazon stock needs any more help. Up 86.32% year-to-date, Amazon entered Prime Day with a staggering market capitalization of $1.67 trillion, making it the third-largest U.S. company.
Amazon ebullience has profound implications for exchange traded funds — 244 to be precise, according to ETF Research Center data. Here are a few ETFs that are prime-time Prime Day ideas.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS)
The Fidelity MSCI Consumer Discretionary Index ETF FDIS lays claim to two interesting facts that investors shouldn't overlook. First, FDIS is the least expensive consumer discretionary ETF, charging just 0.084% per year, or $8.40 on a $10,000 investment.
Second, the Fidelity fund has the largest weight to Amazon among all ETFs. The $1.03-billion FDIS devotes 32.17% of its weight to Amazon, more than quadruple the weight assigned to its second-largest holding.
That's also nearly 900 basis points ahead of the ETF with the next largest Amazon weight and enough to have the Fidelity fund up 37% this year.
ProShares Online Retail ETF (ONLN)
The ProShares Online Retail ETF ONLN is the ETF with the second-largest Amazon exposure: 24.08% at the end of the second quarter.
Up more than 90% year-to-date, ONLN proves there's something to favoring dedicated online retail ETFs over traditional equivalents. Investors would do well to not abandon ONLN after Prime Day or the U.S. holiday shopping season.
The ProShares ETF allocates over one-quarter of its weight to Chinese e-commerce names, nearly half of which goes to Alibaba BABA, meaning the fund is an ideal way to capitalize on China's Singles Day.
VanEck Vectors Retail ETF (RTH)
With an Amazon allocation of 19.27%, the VanEck Vectors Retail ETF RTH ranks fifth among all ETFs in terms of that exposure. RTH does an admirable job of bridging the gap between a company like Amazon and the likes of Target Corporation TGT and Walmart Inc WMT, explaining why the fund is higher by 30.22% this year.
“We believe large, well-capitalized companies like these may present an attractive opportunity for investors, particularly given their potential to grow market share, especially with the holiday season and gradual reopenings right around the corner,” VanEck said in a recent note.
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