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Online Retail ETF Becomes King of its Category

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The Amplify Online Retail ETF (NasdaqGM: IBUY) is the first ETF dedicated to booming e-commerce space, but that’s not the only superlative tied to this fund. These days, IBUY is the largest retail ETF of any stripe, having recently surpassed the SPDR S&P Retail ETF (XRT) for supremacy in this category.

As of Jan. 13, XRT, the oldest retail ETF; had $205 million in assets under management while IBUY’s asset tally was close to $249 million, according to ETFdb data.

“In October for the first time, assets in the biggest online retail exchange-traded fund topped those of the largest broad retail ETF,” reports Andrea Riquier for MarketWatch. “That fund, the SPDR S&P Retail ETF, made up of companies that do most of their business in the physical, not online, world. As of Thursday, XRT, referring to its ticker symbol, had $236 million in assets, compared with $249 million in the e-commerce-focused fund, the Amplify Online Retail ETF.”

IBUY has been a popular thematic play that targets global companies that generate at least 70% of revenue from online or virtual sales. As the market environment shifts and changes, investors may also have the opportunity to capitalize on the growth potential of the e-commerce segment.

Going Inside IBUY

Recently, several brick-and-mortar retailers reported disappointing holiday sales, but overall sales were strong thanks to e-commerce.

Breaking down the retail segment, e-commerce sales this year made up 14.6% of the total, or up 18.8% for the same period last year, according to Mastercard’s recent data based on retail sales from November 1 through Christmas Eve. Overall holiday retail sales, excluding autos, increased by 3.4%.

This year, online sales are projected to surpass $4 trillion, with the biggest players in the field largely expected to capture a major share of the growing pie. For example, Amazon is estimated to account for half of all online sales by 2023. Although IBUY is younger than XRT, the former has consistently outperformed the latter.

Related: The Future Is Bright for This Autonomous Technology ETF 

“XRT has been around since 2006, while IBUY launched in 2016. Over the past 12 months, XRT has returned 3.1%, according to FactSet, while IBUY gained 20.1%,” according to MarketWatch.

IBUY has an international counterpart, the Amplify International Online Retail ETF (NYSEArca: XBUY). XBUY is an index-based ETF that takes on foreign companies or those outside the U.S. that are expected to benefit from the increased adoption of e-commerce around the world.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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