E-commerce purveyors and online retailers are widely regarded as winners in the coronavirus climate, a trend benefiting ETFs such as the Global X E-commerce ETF (EBIZ), but the strength of online shopping won’t dissipate as the virus does.
EBIZ reflects the performance of the Solactive E-commerce Index and looks to invest in companies positioned to benefit from the increased adoption of E-commerce as a distribution model, including companies whose principal business is in operating E-commerce platforms, providing E-commerce software and services, and/or selling goods and services online.
Some market observers believe changes in consumers’ behavior, which were apparent before the virus, are merely being hastened by the COVID-19 pandemic and that online is where it’s at for retailers – a theme that’s expected to be sticky for years to come.
“While online sales have long been growing their market share as a percentage of overall retail spending, the trend has been accelerated as shutdowns force closures at brick-and-mortar rivals,” reports Bloomberg. “Analysts have said that the higher demand is likely to outlast the pandemic, especially in categories like groceries, which previously had less traction online
Many prosaic e-commerce funds feature massive weights to Amazon.com Inc. (AMZN), a sensible approach given that company’s heft, but one that can leave investors under-exposed to some other compelling online retail opportunities.
That’s not a problem with EBIZ. While Amazon is the fund’s second-largest holding at almost 6%, the Global X ETF is diverse relative to competing strategies and provides deeper exposure to a broader swath of the e-commerce ecosystem.
Indeed, Amazon is one of the best-performing large-cap stocks in the U.S. this year, but some other EBIZ holdings are shining, too.
" Shopify is up more than 85% from a low hit earlier this month, becoming one of the most valuable companies in Canada, while Wayfair has more than quintupled off a March low, having surged more than 400% over the period,” according to Bloomberg.
Shopify is the largest holding in EBIZ at over 6% of the fund’s weight while Wayfair checks in at the ninth spot at 4.56%.
Amazon and eBay (EBAY), another EBIZ top 10 component, report earnings next week while Shopify and Wayfair report in early May, so there are plenty of near-term catalysts for the Global X fund.
This article originally appeared on ETFTrends.com.