Profiting From the Rise of Online Retail

Are brick-and-mortar stores on the way out?

After all, with the rise of Amazon.com Inc. (NASDAQ:AMZN) and the shift to online retail companies as a result of the COVID-19 pandemic, it seems like the old American pastime of going to the mall in order to buy the goods that we want or need may be ending. The data seem to support this conclusion, and an article by Coresight Research claims that “25% of America’s roughly 1,000 malls will close over the next three to five years.”

One exchange-traded fund (ETF) that will likely be unaffected by the rise of so-called “dead malls” is IBUY Amplify Online Retail ETF (NYSEARCA: IBUY). This ETF tracks an index of global stocks issued by companies that earn a majority (at least 70%) of their revenue from online retail stores. While companies can be of any market capitalization, American firms receive a minimum 75% weight. Foreign companies receive the rest. Such a procedure keeps the whole portfolio from being dominated by Amazon.

Currently, the fund’s top holdings include Amazon.com Inc. (NASDAQ:AMZN), Expedia Group, Inc. (NASDAQ: EXPE), Liquidity Services, Inc. (NASDAQ: LQDT), Groupon, Inc. (NASDAQ: GRPN), Etsy, Inc. (NASDAQ: ETSY), Copart, Inc. (NASDAQ: CPRT), Airbnb, Inc. Class A (NASDAQ: ABNB) and Booking Holdings (NASDAQ: BKNG).

This fund’s performance has been problematic, especially when including the damage done by the COVID-19 pandemic. As of Dec. 21, IBUY has been down 17.94 over the past month and down 21.53% for the past three months. It is currently down 22.87% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $633.57 million in assets under management and has an expense ratio of 0.65%.

In short, while IBUY does provide an investor with a way to profit from online retail stocks, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.