Thursday, December 8, 2022

Holiday Season Shopping Could Bring Cheer To These ETFs


As the pandemic and US presidential election dominate the new cycle, the holiday shopping season is sneaking up on consumers. (NASDAQ:), already held its two-day Prime Day 2020 sale in mid-October, a month when many US shoppers start preparing for the festivities to come.

Deloitte’s 2019 Holiday Survey of Consumers says that shoppers are “expected to spend $1,496 per household during the holiday season this year, growing at a 5.4% CAGR since 2012.”

Given questions over the state of the , , and the overall somber mood brought on by the pandemic, the holidays are likely be markedly different than years prior.

Although many households will likely scale back their celebrations and shopping, we still expect the holiday season to bring cheer to many companies.

Below are 2 ETFs that stand to gain from the shopping season upon us:

1. Amplify Online Retail ETF

  • Current price: $100.22
  • 52-week range: $33.11 – $100.40
  • Yield: 0.16%
  • Expense ratio: 0.65%

Metrics for 2019 from Digital Commerce 360 show that in the US:

“Online spending represented 16.0% of total retail sales for the year. Amazon accounted for more than a third of all e-commerce in the United States.”

In the pandemic days, online shopping has become even more important, not just stateside but also worldwide. According to the monthly US Census Bureau data, in September 2020:

“Retail trade sales were up 1.9 percent (± 0.5 percent) from August 2020, and 8.2 percent (± 0.7 percent) above last year. Non-store retailers were up 23.8 percent (± 1.6 percent) from September 2019.”

The Amplify Online Retail ETF (NASDAQ:) aims to capture the global shift to e-commerce. The fund provides exposure to global firms with 70% or more of revenue coming from sales online.

IBUY Weekly

IBUY, which has 49 holdings, tracks the EQM Online Retail Index.

The fund started trading in April 2016. About 77% of the companies are US-based, followed by China, Germany, the UK, and Israel.

The top ten businesses comprise 40% of net assets of over $1 billion. Interactive fitness platform Peloton Interactive (NASDAQ:), used car e-commerce platform Carvana (NYSE:), virtual personalized styling service Stitch Fix (NASDAQ:), stock photography provider Shutterstock (NYSE:), and online fashion retailer Revolve (NYSE:) lead the businesses in the ETF.

Since the start of the year, the fund is up 85% and hit an all-time high of $98.99 Oct 14. Those investors who also follow short-term technical charts could be interested to know that the recent run-up in price, especially in the past few days, has pushed several indicators into overbought territory. Thus, short-term profit-taking is possible.

However, long-term investors may regard such a pullback as an opportunity to go long the shares. Beyond both the pandemic and the holiday shopping season, consumer purchase habits could increasingly move online.

2. Ecofin Digital Payments Infrastructure Fund

  • Current price: $38.09
  • 52-week range: $20.31 – $39.19
  • Yield: 0.10%
  • Expense ratio: 0.40%

Over the past decade, financial technology and digital payments have rapidly evolved. During the week, the initial public offering (IPO) by Ant, the Chinese fintech giant owned by Alibaba (NYSE:), was suspended. If it had gone ahead, it would have been the world’s largest IPO.

The interest in the prospective Ant IPO has been intense, in part due to the growth of the industry. Numbers from MarketsandMarkets show:

“The global digital payment market size is expected to grow from USD 79.3 billion in 2020 to USD 154.1 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 14.2%.”

The Ecofin Digital Payments Infrastructure Fund (NYSE:) wants to participate in the sector’s growth by investing in global companies that are part of the digital-payments value chain. These firms mostly include electronic transaction processors, credit card networks, merchant payment products and services, and payments companies.

TPAY Daily

TPAY has 50 holdings. The top ten firms make up about half the fund. Among them include France-based payment service provider Worldline (PA:), Australia-headquartered Afterpay (OTC:), direct banking and payment services Discover Financial Services (NYSE:), Dutch paymen solutions Adyen (OTC:) and commerce ecosystem Square (NYSE:).

Year-to-date, the fund is up 18%. We should note that the fund started trading in early 2019 and thus does not have much return history to analyze. Furthermore, it is a small fund with only $7.5 million under management. However, we believe the secular trend regarding digitalization is a significant one for long-term investors to keep an eye on.

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