With the Federal Reserve’s rate cutting cycle now underway, investors should examine all possible avenues to benefit from this economic momentum. One such route may lie within increasing portfolio exposure to online retail companies. Ever since the COVID-19 pandemic, eCommerce has continued to resonate as a focal point for consumer spending.
Much like other companies on the market, online retailers will be able to benefit from lower borrowing costs from interest rates in order to increase profitability. However, eCommerce has the added benefit of continued enthusiasm for online spending.
A recent report from the Commerce Department shows retail sales outperforming analyst expectations in August. This shocking rebound comes in part from eCommerce, with online store sales jumping 1.4% for the month.
This isn’t the only good news for eCommerce, either. Deliotte’s annual holiday retail forecast anticipates online retail sales growing between 7-9% year-over-year. In total, this would represent overall online sales sitting around $289-295 billion for the holiday season.
Broad eCommerce Exposure
Investors can gain cost-efficient access to a good variety of online retailers through focused ETF investment. For example, investors could use a fund like the Amplify Online Retail ETF (IBUY ) to gain diversified eCommerce exposure.
IBUY invests in global equity securities that are engaged in gaining revenue from digital or online sales. The fund holds a wide set of online retail companies across both the globe and cap spectrum. As such, IBUY can serve as a broad ballast for fortifying a portfolio with more digital retail companies.
Targeted Amazon Strategy
Alternatively, investors could try to take big bets on Amazon by investing in the Direxion Daily AMZN Bull 2X Shares (AMZU ). AMZU seeks to provide 200% of the daily performance of Amazon’s common shares.
Investing in a leveraged single-stock fund can be risky, but investors who are confident in Amazon’s performance trajectory could see good results. Given Amazon’s track record in sales during the holiday season, the investment risk may very well be worth the reward. Direxion’s immense experience in navigating a variety of different leveraged & inverse ETF strategies can also be seen as an added bonus.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for IBUY, for which it receives an index licensing fee. However, IBUY is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IBUY.
