The Global X E-commerce ETF (EBIZ ) is proving to be one of the stars among online retail ETFs this year, which may continue thanks to a slew of favorable, long-term data points.
The Global X E-commerce ETF tries to reflect the performance of the Solactive E-commerce Index, which include companies that are positioned to benefit from the increased adoption of e-commerce as a distribution model, including but not limited to companies whose principal business is in operating e-commerce platforms, providing e-commerce software and services, and/or selling goods and services online, according to the fund’s prospectus.
“While there is a perception that online shopping has become virtually ubiquitous, in Q1 2019, penetration rates were still low, with e-commerce sales representing just 10.2% of the $1.34 trillion of total retail sales in the US,” said Global X in a recent research note. “Of course, online sales are closing the gap, growing much more rapidly than traditional brick and mortar purchases. In the first quarter of 2019, e-commerce sales increased 12.4% year-on-year, while total retail sales increased just 2.7% during the same period.”
Top holdings in EBIZ include Shopify (SHOP) and MercadoLibre (MELI), both of which have seen their shares more than double this year.
Right Place, Right Time for Online Retail
Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through exchange traded funds that target the e-commerce segment.
Ex-US markets also represent significant opportunity for EBIZ and many of its underlying holdings.
“Outside of the US, e-commerce has shown even faster growth in certain areas. China, for example, has become the world’s largest e-commerce market representing more than 40% of the world’s online transactions. Nearly a quarter of total retail sales in China are made online as Chinese consumers benefit from rising wages, urbanization, and greater internet connectivity,” according to Global X.
As the retail landscape changes, investors can also capitalize on the trend through exchange traded funds that target the e-commerce segment. Demographic trends are driving those shifts.
“While traditional retail sales grow at around the inflation rate, companies that are online first, or have well developed online capabilities, have the potential to experience strong growth fueled by the increasing adoption of online ordering by consumers around the world,” said Global X.
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