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ETFs for Making an Online Retail Play

By  +Follow December 5, 2013 12:53PM
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The data’s back and Cyber Monday was the biggest online shopping day in history. Again. In a continuation of a trend that shocks almost exactly no one anymore (unless you’re one of the poor saps who’s held a long position on JC Penney (JCP) over the last couple years), online retail continues to grow at a fairly explosive rate.

Online sales were up 20.6 percent, year-over-year, from 2012’s Cyber Monday according to IBM’s (IBM) Digital Analytics. Adobe (ADBE) , meanwhile, only reported a 16 percent increase, according to their data, but clocked $2.29 billion in total sales. That’s dwarfed by the $12.3 billion in sales at brick and mortar retailers on Black Friday and Thanksgiving, but the trend of online retailers claiming an ever bigger piece of the pie appears to be here to stay.

So, maybe you’re on board with believing that Amazon’s (AMZN) plans for world domination are legit. Or, maybe you think the fervor over the growth in online sales has led to those stocks being severely overvalued and on course for a major correction. However you see the market playing out, one has ample reason to look for ETFs that will provide an investor a chance to make their particular online retail play.

There is not currently an ETF dedicated to online retailers like the SPDR S&P Retail ETF ($XRT) tracks traditional retailers. However, for those willing to get creative, there are a few ETFs one can use to make place a bet on the health of the online retail segment.

SPDR S&P Retail ETF ($XRT)

While this ETF is specific to traditional retailers, it’s worth noting that online sales aren’t limited to just Amazon, EBay (EBAY) , and other dedicated online retailers. Most traditional brick-and-mortar stores are actively building out their online capacity, and it’s not hard to make the argument that investing in those companies will gradually evolve into an investment in online retail at a rate consistent with that of the market. What’s more, the piece of the online pie that’s there doesn’t come at the price of completely eschewing the rest of the retail industry.

Market Vectors Retail ETF ($RTH)

If you’re a fan of the argument for XRT, though, the Market Vectors Retail ETF is potentially a superior blend. The RTH includes major retailers like Wal-Mart (WMT) , Home Depot (HD) , and CVS Caremark (CVS) among its five biggest holdings. However, it also features Amazon as its single biggest holding at 9.55 percent of its portfolio. Again, this is a blend that should capture a big piece of both the brick-and-mortar and online retail pie.

First Trust Dow Jones Internet Index Fund ($FDN)

However, many investors may not want any part of the traditional retail stocks. If you’re really intent and making a more specific and targeted play with online retail and staying away from any ailing brick-and-mortar dinosaurs, one option could be the First Trust Dow Jones Internet Fund. Based on the Dow Jones Internet Index, all of the companies that receive at least half of their annual sales/revenue from the internet.

This may keep things strictly online, but it also means that it’s no longer strictly retailers, too. Amazon is the second largest holding, but Google (GOOG) is the biggest at 11.18 percent and Facebook (FB) is the third largest with 6.45 percent of the portfolio.

Internet HOLDRS ($HHH)

So, if one really wants to get more specific, the Internet HOLDRS ETF may be the way to go. Like other HOLDRS funds, it’s much smaller, featuring only 12 stocks and not tracking a specific index as a benchmark. Amazon makes up 43.03 percent of the fund, and EBay is another 22.83 percent.

Just Buy (or Short) Amazon

Of course, once you’re talking about an ETF with no index and only 12 holdings, with two stocks making up 65 percent of the portfolio, it starts to become unclear why one’s looking for ETFs at all. Online is still a fairly narrow industry, with only a handful of major players that are publicly traded. While clearly much riskier than an ETF, anyone really intent on making a specific play on online retail may be best served by taking long or short positions with Amazon or EBay.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for amzn
Mark Edson
20 Sep 14 19:52:17
RT @markzawacki: Taobao (Alibaba) already selling iPhone 6 counterfeits; Imagine $AMZN doing that. Shameless. http://t.co/NxDyIrj7dM
Jorch
20 Sep 14 19:45:22
RT @heuristicstox: $GOOGL $FB $TWTR $AMZN ..... ⏰ http://t.co/prWNxVYjGK
A COMPLACENT TRADER
20 Sep 14 19:39:05
RT @heuristicstox: $GOOGL $FB $TWTR $AMZN ..... ⏰ http://t.co/prWNxVYjGK
Livermore's Lounge
20 Sep 14 19:36:49
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[ Amazon News ]
20 Sep 14 18:33:11
Terrence O'Brien calls the new Kindle Voyage from Amazon "the Rolls-Royce of e-reade... https://t.co/mUfsu93PMK $amzn http://t.co/2XTlpQMsh7
Chris Kader
20 Sep 14 18:14:52
@wandy922 @talkequities I am also an iPhone guy but $AMZN is giving this away, especially compared to iPhone
johnshinal
20 Sep 14 18:04:41
How much of the service chain will $BABA $AMZN & ecommerce rivals have to own? Delivery? Drones? Or outsource better? http://t.co/oCth6PDO5a
Livermore's Lounge
20 Sep 14 17:57:08
“@engadget: $AMZN new budget tablets offer new size and color options: http://t.co/zFOITJGlns http://t.co/namDupxCnr” RT
Jason A. Moser
20 Sep 14 17:15:29
Amazon's Fire Kids Edition tablet: 2 years, kid breaks it, they replace it, no questions asked. That's tough to beat right there. $AMZN
Tommy Unger
20 Sep 14 17:10:48
Amazon is unlike Apple, Google, Facebook, or even Microsoft. $AMZN makes buying easy, but the brand will not carry it through hard times.
patrick borradori
20 Sep 14 17:07:45
“@TheStreet: Amazon announces new $79 Kindle! http://t.co/0tIuP6XiJI $AMZN” @ralaua
Dean
20 Sep 14 16:29:52
Expected a tech selloff for stocks that earnings don't stack up.. Called $AMZN top & got abuse for it.. BUT buy the earning tech companies!!
Ryan Neufeld
20 Sep 14 16:24:38
RT @TheStreetTV: Amazon announced not one, but seven new Kindle devices! And they're not just for adults: http://t.co/Pm9BraIbY8 $AMZN via …
AdmiralRoadCapital
20 Sep 14 15:02:50
Amazon $AMZN 1% Operating Margin ( on good days)
The Kid
20 Sep 14 14:54:49
RT @AdmiralRoadCap: $AMZN went from what 20 bucks to 300 or something like that, all the while the hit pieces, just something to keep in mi…
Chris Kader
20 Sep 14 14:46:16
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20 Sep 14 14:43:39
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20 Sep 14 14:34:42
Alibaba IPO: Everything You Need To Know (Video) $BABA $YHOO $EBAY $AMZN http://t.co/p5ZP2aR0RP
OneSupport
20 Sep 14 14:28:31
RT @TheStreet: Amazon announces new $79 Kindle! Continues to press more in hardware, expand offerings, play to strengths: http://t.co/KduT6…
AdmiralRoadCapital
20 Sep 14 14:17:28
$AMZN went from what 20 bucks to 300 or something like that, all the while the hit pieces, just something to keep in mind about $BABA
AdmiralRoadCapital
20 Sep 14 14:07:35
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AdmiralRoadCapital
20 Sep 14 14:04:07
If yur old enough remember how Alan Abelson of Barron's had this jihad against Amazon $AMZN when it first came public, it's first years
Alysia Sarkisian
20 Sep 14 13:59:59
RT @TheStreet: Amazon announces new $79 Kindle! Continues to press more in hardware, expand offerings, play to strengths: http://t.co/KduT6…
TheStreet
20 Sep 14 13:59:10
Amazon announces new $79 Kindle! Continues to press more in hardware, expand offerings, play to strengths: http://t.co/KduT6wEZ3O $AMZN
Mark Zawacki
20 Sep 14 13:40:21
Taobao (Alibaba) already selling iPhone 6 counterfeits; Imagine $AMZN doing that. Shameless. http://t.co/NxDyIrj7dM
Jim Stebbins
20 Sep 14 13:36:00
RT @sandiegosam: $AMZN + $EBAY + $TWTR = $BABA....Can we get the audit papers for $BABA?
Luke Romyn
20 Sep 14 12:56:42
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SpecialK
20 Sep 14 12:54:38
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Craig S.
20 Sep 14 12:48:21
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Mad Kindle Promos
20 Sep 14 12:40:46
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Blarescape5
20 Sep 14 12:27:59
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Distress Value
20 Sep 14 12:23:30
RT @CoryTV: BREAKING: #Alibaba closing price-to-EBITDA at 54x. Comp: Amazon 34x, Baidu 35x, Ebay 14x, Salesforce 94x. $AMZN, $BIDU, $EBAY, …
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20 Sep 14 12:16:13
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20 Sep 14 12:14:06
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Zubeyr Kamil Açıksar
20 Sep 14 12:12:54
RT @TheStreetTV: Amazon announced not one, but seven new Kindle devices! And they're not just for adults: http://t.co/Pm9BraIbY8 $AMZN via …
Antonio Costa
20 Sep 14 12:12:08
As G20 chases growth goal, members differ on how to get there http://t.co/60INHuoIWi $AMZN $AAPL
TheStreet TV
20 Sep 14 12:01:00
Amazon announced not one, but seven new Kindle devices! And they're not just for adults: http://t.co/Pm9BraIbY8 $AMZN via @BrittanyUmar
Ryan M Craver
20 Sep 14 11:59:40
Wondering revenue/profit Amazon is giving up by providing prime homepage placement to products like Fire (items that don’t sell) $AMZN
Adeel Ahmad Aamir
20 Sep 14 11:57:56
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Robin Murray MD CFII
20 Sep 14 11:41:47
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Robin Murray MD CFII
20 Sep 14 11:28:21
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Qasim Khan
20 Sep 14 11:20:48
RT @ValaAfshar: Biggest U.S. tech companies founded by 1st/2nd gen immigrants: 1 $AAPL 2 $GOOG 3 $IBM 4 $ORCL 5 $FB 6 $AMZN 7 $QCOM 8 $EMC…
Todd Enders
20 Sep 14 10:57:02
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Juan Doe
20 Sep 14 10:48:02
$AMZN - AMZN - https://t.co/sp2R6P9Mwq
Moaz Ibrahim
20 Sep 14 10:43:55
RT @ValaAfshar: Biggest U.S. tech companies founded by 1st/2nd gen immigrants: 1 $AAPL 2 $GOOG 3 $IBM 4 $ORCL 5 $FB 6 $AMZN 7 $QCOM 8 $EMC…
Auto Binary option
20 Sep 14 10:43:19
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20 Sep 14 10:41:01
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By  +Follow December 5, 2013 12:53PM
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