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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
Evan H. Eichhorn
24 Oct 14 07:42:51
RT @carlquintanilla: This is the worst day for Amazon shares since, well .. since the last earnings release. $AMZN
Anthony DePaola
24 Oct 14 07:42:43
RT @AnalystWire: Deutsche Bank Reiterated Buy Rating on http://t.co/g7w3KNK8Tc $AMZN http://t.co/RLWJBxcHTs
Pascal Wiesendanger
24 Oct 14 07:42:29
#amazon - Biggest loss since 2000 $AMZN
OlryPhoto
24 Oct 14 07:41:51
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
James Stanhope
24 Oct 14 07:41:40
RT @retheauditors: “@herbgreenberg: $AMZN minimizes profits to avoid paying taxes. Really good piece by @retheauditors https://t.co/W35zgM9…
Rag Time Gal
24 Oct 14 07:41:30
RT @theflynews: Amazon downgraded at Cowen, Janney after results miss expectations $AMZN: Full Story http://t.co/AjrMpF81vQ
frankgillespie
24 Oct 14 07:41:20
RT @CoffeeandMarket: Today @Cianfrocca talks Ebola in NYC, $AMZN earnings and impact on markets http://t.co/sYrlBZEVRx
Kathy
24 Oct 14 07:41:09
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
The Fly
24 Oct 14 07:41:05
Amazon downgraded at Cowen, Janney after results miss expectations $AMZN: Full Story http://t.co/AjrMpF81vQ
Charles
24 Oct 14 07:40:57
@OptionsAction @Michael_Khouw @SterneAgee imho, $AMZN has always been a vaporware like operation that runs a warehouse.
John Gordon
24 Oct 14 07:40:48
RT @EddyElfenbein: Shares of Amazon have plunged all the way down to 150 times next year's earnings. $AMZN
rubicon59
24 Oct 14 07:40:33
At the end, will $AMZN write off their entire business ?
Azcon
24 Oct 14 07:39:49
$AMZN is the #Democrat party in November. #Obummer. Bwahahahaa
Cates Auction
24 Oct 14 07:39:43
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Vetr
24 Oct 14 07:39:39
Amazon's loss makes holidays a question mark https://t.co/95iwsfkEam $AMZN #Holiday
Molly Guenther
24 Oct 14 07:39:26
Amazon customer benefits: priceless. $AMZN shareholder: profitless.
NHHumanitiesCouncil
24 Oct 14 07:38:34
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Scott Raynovich
24 Oct 14 07:37:56
"@howardlindzon: "@EddyElfenbein: Shares of Amazon have plunged all the way down to 150 times next year's earnings. $AMZN""
Nicholas
24 Oct 14 07:37:53
RT @BuckarooTrades: $AMZN will probably hurt my 100% win rate that I've had for 80 years. I also bench press airplanes and am best friends …
Stacey Landsman
24 Oct 14 07:37:32
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Dan
24 Oct 14 07:37:29
$AMZN almost 5K 300 c's against 708 OI
SIAnalystWire
24 Oct 14 07:37:18
Deutsche Bank Reiterated Buy Rating on http://t.co/g7w3KNK8Tc $AMZN http://t.co/RLWJBxcHTs
Wall Street Watkins
24 Oct 14 07:37:09
RT @MikeBellafiore: 290 key level intraday in $AMZN.
Kenisha
24 Oct 14 07:36:57
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
pjfny
24 Oct 14 07:36:30
RT @CapitalObserver: I've attended about 50 $AMZN funerals on Twitter
Read_this_n0w
24 Oct 14 07:36:26
P 17.5-18 still in the cards , growth over, priced for big growth.. many new competition from big boys $SPy $INDU $AMZN $LAKE
Tamara
24 Oct 14 07:36:04
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Jan(McMorris)Manimoi
24 Oct 14 07:36:01
RT @SAlphaTrending: Part Of http://t.co/aMQN4BOdHM's Core Is Dying http://t.co/dqTN4qFCOR $AMZN
Jan(McMorris)Manimoi
24 Oct 14 07:35:59
RT @SAlphaTrending: No One Wants To Hear Anything Good About Amazon, But... http://t.co/jJfZ1WbGil $GOOG #GOOGLE $AMZN
Dan
24 Oct 14 07:35:21
$AMZN L 290 c's 2.85
BuckarooTrades
24 Oct 14 07:35:14
$AMZN will probably hurt my 100% win rate that I've had for 80 years. I also bench press airplanes and am best friends with Chuck Norris.
Illinois Local
24 Oct 14 07:34:32
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Trax Jarred
24 Oct 14 07:34:22
Picked up some cheap $AMZN calls #specplay
Jerry O'Connor
24 Oct 14 07:34:20
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Dividend Master
24 Oct 14 07:34:05
$JPM telling clients to ignore $AMZN Fire fiasco writedown & pretend that made numbers look a tad better
Scott Barlow
24 Oct 14 07:33:52
cigar butt RT @EddyElfenbein: Shares of Amazon have plunged all the way down to 150 times next year's earnings. $AMZN
Wen ☺
24 Oct 14 07:33:44
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
AMZN Quote and News
24 Oct 14 07:32:51
$AMZN stock quote, 10:16am: 292.1795 -21.0005 (-6.71%).
BuckarooTrades
24 Oct 14 07:32:39
$AMZN I totally botched my call trade. Was up 200%, now in the red. Thought it would keep ripping after the gap down. Will hold into close.
Rajiv
24 Oct 14 07:32:36
RT @ForbesTech: Amazon missed wide of analysts' expectations for losses last quarter: http://t.co/ARUElkP2Cd $AMZN http://t.co/u4uKOWfeST
Sain Ozdemir
24 Oct 14 07:32:34
After $AMZN, you'd think $NQ_F would be much LOWER than $ES_F, but $GILD, $MSFT, $CMCSA are keeping NQ up...
StockView
24 Oct 14 07:32:33
$AMZN off lows as it reports yet another loss and comparisons to cach machine $baba abound http://t.co/zdxUbKNoXt http://t.co/MxTOFqnMh3
Tom Quirke
24 Oct 14 07:32:26
@PopularMr I agree, I caught a nice #Short on the Markets in pullback, but clearly a #BlackSwan event could be imminent now $SPY $NFLX $AMZN
Joey Sassoon
24 Oct 14 07:32:20
@CNBC not the end for $AMZN , but they need to profit off of their CONTENT and get better ROI. Fire phone and TV were disasters
Sarah Cowley
24 Oct 14 07:31:31
“@mkaplanPMP: $AMZN down 10% on miss, weak outlook http://t.co/hMO5wNT0Nv” or is it another tax scam?
Tradesight
24 Oct 14 07:31:22
NAZ VOL 424 mil after 60 - Good volume but a lot of it is $AMZN and $MSFT. #Markets dead flat and choppy.
BP
24 Oct 14 07:31:05
@TheStreet actually $amzn is trading bullish. it was 295 in last week plunge. so they will fill this gap to 310 also.
otterom
24 Oct 14 07:30:14
Just bought 3 things from $AMZN ytdy, so... 'Amazon Down 10%: The real reason why and how to trade it' http://t.co/QhBawo6UDJ
Seeking Alpha
24 Oct 14 07:30:05
No One Wants To Hear Anything Good About Amazon, But... http://t.co/jJfZ1WbGil $GOOG #GOOGLE $AMZN
Theneeds Stocks
24 Oct 14 07:29:57
RT @herbgreenberg: $AMZN minimizes profits to avoid paying taxes. Really good piece by @retheauditors https://t.co/NNlApbdNwJ
				
				
By  +Follow December 5, 2013 12:53PM
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