Today is Cyber Monday, a day when online retailers in the United States and more and more around the world are offering big discounts to shoppers. Last year, US revenue was nearly $ 11 billion on Cyber Monday.
Adobe statistics show that over 41% of people have used their mobile devices (as opposed to desktops) while shopping.
As the new Omicron variant of the coronavirus dominates the news headlines, a significant number of people are likely to shop online rather than visiting crowded brick and mortar stores. And the measurements suggest that US buyers are more interested in offers from names like Amazon (NASDAQ :), Target (NYSE :), Walmart (NYSE :), Best buy (NYSE 🙂 and Kohls (NYSE :), among others.
Therefore, today’s article features two thematic exchange-traded funds (ETFs) that could benefit from increased digital sales. Online shopping raises the specter of cybercrime, so investors may also want to consider cybersecurity ETFs.
ProShares Online Retail ETFs
- Current price: $ 65.50
- 52 week range: $ 63.21 – $ 93.45
- Expense ratio: 0.58% per year
The share of e-commerce as a percentage of overall retail sales has grown steadily over the past decade and now exceeds 13%. Our first fund, the ProShares Online Retail (NYSE :), invests in 40 companies that primarily sell merchandise online. The fund was first listed in July 2018 and manages nearly $ 834.2 million.
About three-quarters of the companies in the fund are from the United States. Then China, Taiwan, Mexico and Argentina, among others. Almost 70% of the fund is in the top 10 for stocks. In other words, it is top heavy. In fact, the top three names represent 40% of the fund.
Amazon has the highest bracket with 26.06%, followed by Chinese e-commerce giant Ali Baba (NYSE :), which came under significant regulatory pressure in 2021. Next come eBay (NASDAQ :), based in Singapore Sea (NYSE :), logistics platform DoorDash (NYSE 🙂 and Overstock.com (NASDAQ :), which has steadily increased its exposure to crypto in recent years.
So far in 2021, the ONLN is down 13.6%. After hitting an all-time high in February, the ETF lost around 30% of its value.
In recent months, investors have shifted from stocks that benefited from the ‘stay at home, work from home’ trend of 2020 to stocks in the post-COVID-19 era. As a result, the fund is under pressure. However, as many countries reintroduce measures against the Omicron variant, the ONLN could easily gain the attention of investors again. Interested readers might consider buying the ETF between $ 62 and $ 65.
Meanwhile, investors looking for an equal-weight fund that invests in a range of US-based retailers might consider looking for the SPDR® S&P Retail ETF (NYSE :).
2. ETFMG Prime ETF Mobile Payments
- Current price: $ 58.74
- 52 week range: $ 57.95 – $ 73.38
- Expense ratio: 0.75% per year
Rising global e-commerce sales volumes have drawn attention to companies that focus on non-cash transactions and mobile payments. Recent measurements suggest that the global mobile payments market, which was valued at nearly $ 1.5 trillion in 2020, is expected to reach $ 5.4 trillion in 2026. Such an increase in revenue would mean a compound annual growth rate. (CAGR) of about 24.5%.
Today’s second fund, the ETFMG Prime Mobile Payments ETF (NYSE :), gives exposure to companies in the electronic and mobile payments industry. They include credit card networks, payment processors, as well as those that provide software, payment infrastructure, and payment solutions such as prepaid cards, smart cards, or virtual wallets. The fund started trading in July 2015.
IPAY, which holds 52 holdings, tracks the Prime Mobile Payments Index. The top 10 names represent about 55% of the net assets of just over $ 1 billion. In terms of sub-sectors, we see IT and outsourced services (84.32%), consumer credit (11.32%), application software (2.62%) and equipment and electronic instruments (1.13%).
Top holdings on the list include the Integrated Payments group American Express (NYSE:); financial services and payments technology heavyweights MasterCard (NYSE 🙂 and Visa (NYSE:); financial technology group (fintech) Square (NYSE :), known for its digital payments ecosystem; and the Netherlands Adyen (OTC :), which provides mobile and point-of-sale (POS) payment solutions.
Since the start of the year, IPAY is down 11.7%. Since reaching an all-time high (ATH) at the end of April, the ETF has lost around 20% of its value. Potential buy and hold investors might see the $ 55 level as a better entry point.