Amazon Prime Day has come.
Amazon The bargain-focused two-day shopping vacation on Tuesday and Wednesday highlighted the consumer shift to online shopping in a difficult year for brick and mortar retailers. The stock is up nearly 89% since the start of the year, powering online exchange-traded retail funds that bear the name.
The three ETFs with the highest Amazon exposure on the market – MSCI Consumer Discretionary Index ETF from Fidelity (FDIS), Long Online / Short Stores ETF from ProShares (CLIX) and ProShares online retail ETF (ONLN) – are up 38%, 85% and 93% respectively this year. ONLN hit a 52-week high on Tuesday.
Four key factors have driven investors to e-commerce, Simeon Hyman, global investment strategist at ProShares, told CNBC’s “ETF Edge” on Monday.
First, “The transition is earlier than you think. You didn’t miss it,” he said. “Only 16% of retail sales were online in the second quarter, so 84 cents was spent in brick and mortar stores and many of them closed.”
The Coronavirus The pandemic recovery for business cannot be ruled out either, Hyman said, adding that it helped boost retail sales from 11% to 16%.
“Think of quadrupling the penetration of the straggler, food, and also the stickiness of changing the proportion of people like Tough – that’s 70% subscriptions, so these new customers are sticky – right? Etsy, which has so many more eyeballs after 15% of its sales, came from masks, “he said.
Third are the basics, said the strategist. Walmart took second place in online retail, but its margins have shrunk in the past 10 years while Amazon’s have doubled, he said.
“The basics point to the online folks,” he said.
“Finally, if you do see such a performance spike, worry about the rating. Let me make this surprising note: if you look at the relative rating of our online shopping cart, the ProShares online shopping cart, and compare it to the one in Im In the technology sector, we trade at half price [value] three or four years ago. At least in relative terms – I know it’s hard to make an absolute valuation these days – not as expensive as you might think. “
Ed Rosenberg, senior vice president and head of ETFs at American Century, said the influence of Amazon is evident even within his company Focused dynamic growth ETF (FDG), started earlier this year.
“Even the active managers recognize that Amazon is currently the game in retail,” he said in the same “ETF Edge” interview.
The “downstream effects” of Amazon are also important, said Rosenberg.
“If you shop online, what else does it do? [go]”, he said.” With this fund as an example, one of the top 10 positions also belongs MasterCard and i think you are seeing some of the downstream impact from people using credit cards and also seeing growth in that area, whether it is mastercard, Visa, American Expressto take advantage of Amazon and Prime Day and be online. “