Recover Along With the Online Retail Sector

In recent years, more and more shopping has taken place online.

Though some online retailers may have appeared to underwhelm recently due to the decreasing pandemic bump, the overall trend towards shopping from the convenience and comfort of our homes is here to stay. For many investors, looking towards online over brick-and-mortar retailers seems like the only sensible way to invest in the sector.

One tool that can be used to gain exposure to the sector is ProShares Online Retail ETF (ONLN). This exchange-traded fund (ETF) holds a range of companies whose primary business is online, mobile or app-based sales.

The ETF has a global reach, with the majority of its 26 holdings — 74% — consisting of American companies but with a few entrants from elsewhere, mainly China. The fund’s rules include investing no more than 25% of assets in non-U.S. holdings, so the fund should remain primarily domestic with some global exposure.

ONLN holds $118.78 million in assets. Its expense ratio of 0.58% is somewhat high, as is often the case with relatively specialized funds, but it pays 1% in dividends. The fund’s performance shows that it has returned to pre-pandemic levels after more than doubling in 2020.

Largely as a result of those previously elevated prices, its one-year performance is -57.1%. However, this also means investors need not worry about investing in an industry already at its peak; ONLN has the potential to climb.

Chart courtesy of www.StockCharts.com

Top holdings of ONLN include Amazon.com Inc. (AMZN), 19.22%; Alibaba Group Holding (BABA), 11.31%; eBay Inc. (EBAY), 7.92%; Pinduoduo Inc. (PDD), 5.28%; and Sea Ltd. (SE), 5.22%. The top 10 account for 71% of assets. The holdings tend to be in large companies, with their average weighted market cap rolling in at $315 billion.

For investors interested in the online retail industry despite its recent setbacks, ProShares Online Retail ETF (ONLN) provides a convenient way to allocate assets accordingly.

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.