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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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Eli De Smet
28 Dec 14 01:13:09
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
Mark Skilton
28 Dec 14 00:44:01
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Julien Ognier
28 Dec 14 00:40:14
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
REANA
28 Dec 14 00:35:54
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
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28 Dec 14 00:24:26
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28 Dec 14 00:24:09
"@ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/wTP67NPZju $DDD $AMZN"
 Athul
28 Dec 14 00:10:04
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
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28 Dec 14 00:03:34
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Tim Park
28 Dec 14 00:00:49
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
Çınar Topaloğlu
27 Dec 14 23:56:14
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
Andrei Brasoveanu
27 Dec 14 23:50:21
Google + Apple + Amazon invest $50M+ per year, more than any other company in the world http://t.co/0mzJTSt3Ay $goog $aapl $amzn
IH News Desk
27 Dec 14 23:49:38
$SLV News Updated Sunday, December 28, 2014 02:11:08 AM $CHK $NKE $AMZN $GOLD http://t.co/HVwHxxdiYF
TechDigest
27 Dec 14 23:40:26
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
Reihane.abdollahi
27 Dec 14 23:40:17
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
iTechNews
27 Dec 14 23:40:08
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
J.M. Sánchez-Arrufat
27 Dec 14 23:34:28
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Vinay marwyn dsouza
27 Dec 14 23:32:00
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
Navin Jay
27 Dec 14 23:17:50
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
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27 Dec 14 23:09:37
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27 Dec 14 23:09:17
3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/6ksGBMem77 $DDD $AMZN
ShababniK
27 Dec 14 23:08:44
RT @ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
Michael Vasanth
27 Dec 14 23:04:11
RT ForbesTech: 3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/a48RCshsur  $DDD $AMZN
Forbes Tech News
27 Dec 14 23:00:00
3D Systems and Amazon struggled this year, but look for that to change in 2015: http://t.co/VxJie1b6q2 $DDD $AMZN
IH News Desk
27 Dec 14 22:49:07
$AMZN Short Sales Updated Sunday, December 28, 2014 01:11:12 AM $SRPT $HJOE $ECIG $RSP http://t.co/NmqDrZD88m
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27 Dec 14 22:32:13
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27 Dec 14 22:32:10
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27 Dec 14 21:54:26
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27 Dec 14 21:48:09
$SSYS Stock Message Board Updated Sunday, December 28, 2014 00:11:08 AM $AMZN $PG $INCC $HAL http://t.co/aIQRe4G0kH
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27 Dec 14 21:48:05
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27 Dec 14 21:31:37
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Pro Trader
27 Dec 14 20:55:55
Amazon’s 2014 Holiday Sees Mobile Shopping Approach 60% Of Total Volume http://t.co/PWoLwZXIQA $AMZN
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27 Dec 14 20:47:19
$BBDAD Opinions Updated Saturday, December 27, 2014 11:11:10 PM $PG $ROX $CCSC $AMZN http://t.co/aYqFogmr0A
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27 Dec 14 20:47:11
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27 Dec 14 20:35:08
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27 Dec 14 20:08:07
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27 Dec 14 20:07:05
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27 Dec 14 20:07:05
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27 Dec 14 19:28:13
$GBGM Investor Opinions Updated Saturday, December 27, 2014 10:07:14 PM $AMZN $EWM $INAP $AAPL http://t.co/K9nx16jebU
Chris Tomlinson
27 Dec 14 19:07:23
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Claus
27 Dec 14 18:31:48
How many of $AMZN’s new 10M Prime subs continue after they've done all their 30-day free trial shipping and returning for the holidays?
Jorge Pinto
27 Dec 14 18:23:04
Commented on: "Debunking Yet More Misleading http://t.co/0HlJXTDjYF Articles" http://t.co/Rk5qDAswu8 $AMZN
Nancy Boots Davison
27 Dec 14 18:07:54
RT @1nvestor: Amazon found a little R at the 50 SMA on Friday & mildly rejected. MACD cross up potential, RSI Rising. Up. $AMZN http://t.c…
Nancy Boots Davison
27 Dec 14 18:07:16
RT @UPBOptionMil: $AMZN strong end to the week, looking for more next week - I shared this chart on Monday - http://t.co/qvmnDUSaoV
Nancy Boots Davison
27 Dec 14 18:06:59
RT @BlueFielder: $AMZN Clear out the 310.40 block and there’s more …. up
IrrationalGUY
27 Dec 14 18:00:21
RT @1nvestor: Amazon found a little R at the 50 SMA on Friday & mildly rejected. MACD cross up potential, RSI Rising. Up. $AMZN http://t.c…
IrrationalGUY
27 Dec 14 17:59:51
RT @UPBOptionMil: $AMZN strong end to the week, looking for more next week - I shared this chart on Monday - http://t.co/qvmnDUSaoV
IrrationalGUY
27 Dec 14 17:59:40
RT @BlueFielder: $AMZN Clear out the 310.40 block and there’s more …. up
IH News Desk
27 Dec 14 17:43:36
$HJOE Short Sales Updated Saturday, December 27, 2014 8:11:11 PM $GRCU $EWJ $BBRY $AMZN http://t.co/nvjA9ytpy0
Pzaa...Guy
27 Dec 14 17:40:16
$AMZN - Bed, Bath & Beyond Brick and Mortar http://t.co/YP1MXU8IBd
wallstreetstock
27 Dec 14 17:40:13
$AMZN - Bed, Bath & Beyond Brick and Mortar http://t.co/GgFiq9SFcl
				
				
By  +Follow December 5, 2013 12:53PM
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