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Amplify ETFs Quietly Amass Billions

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·6 min read
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Christian Magoon
Christian Magoon

Five years ago, Amplify ETFs jumped into the game with the launch of the Amplify Online Retail ETF (IBUY), the first of its kind to market. The fund has slowly but steadily grown, finding its way to the top of the segment as the largest retail ETF in the U.S. Today, IBUY has $1.6 billion in assets under management. You could say ideas at Amplify come before their time, as was the case with IBUY, and with the blockchain ETF Amplify Transformational Data Sharing ETF (BLOK), which recently crossed $1 billion in AUM.

Christian Magoon, founder and CEO of Amplify, is a veteran of the ETF industry.  Starting out at First Trust more than 20 years ago, he would later go on to serve as president of Claymore Securities and its ETF division. When Claymore was bought by Guggenheim Partners, he started YieldShares, which would eventually morph into Amplify ETFs. We recently chatted with Magoon to get his take five years in and nearly $5 billion in assets later.

 

ETF.com: Take us back to day one, nearly five years ago, when you launched your first ETF, IBUY, the Amplify Online Retail ETF.

Christian Magoon: When we first launched IBUY, the reaction was one of two: “Isn't there already an ETF that focuses on online retail?” The answer was no. Secondly, people almost didn't understand the term “online retail.” A lot of questions were, “Is this based on some derivative?” Again, the answer was no. The fund offers exposure to companies with 70% or more of their revenue coming from online retail.

It was definitely an education that first year. But since then, online continues to grow in terms of market share over brick and mortar. And the COVID situation was the perfect storm for this ETF, because it fast-forwarded that retail adoption by several years. We’ve seen several years of growth and market share in online retail in the last 12 months or so.

ETF.com: It’s surprising that the Amazon exposure is so small—1.74%. It’s not even a top 10 holding.

Magoon: A lot of people think this is like an Amazon ETF. In fact, because Amazon shares have stalled out through the last six months or so of the rally, it’s not been the leader. It's really been a lot of the smaller peer plays—like the Etsys, the Wayfairs, the Carvanas of the world—that have done quite well. We have essentially equal exposure to those types of purer-play names versus the headline name of Amazon. And keep in mind Amazon has many businesses, whether they’re literally physical brick-and-mortars like Whole Foods, or the cloud computing side.

That equal weighting thing has been a little bit of our secret, in the sense that we've been able to get smaller, more pure-play [online] names. We only saw 16% of retail sales online. Most of the research suggests this will rise to 25-30% in the next few years. It's early for online retail. Market share could grow by 50-100% in the coming years.

ETF.com: Amplify’s success didn't happen overnight.

Magoon: Once you get two to three years in, you start watching an ETF to see if it’s going to be viable. Almost every time, in my experience, you've ended up closing an ETF. Usually, you wish you did it earlier.

And there could be exceptions. When we launched FAA [the Guggenheim Airline ETF that has closed], we waited three, four years. It just didn't materialize. And then there were probably another five years before there was the US Global Jets ETF (JETS). And then JETS was out for maybe two to three years without having much in terms of AUM, and then COVID hit, and everyone became interested. So you can get lucky.

ETF.com: Let’s talk about BLOK.

Magoon: That was another story of perseverance. I consider myself an underdog, a small sponsor. I still think of us as a startup. We're a little bit past that stage now, thankfully. But that's kind of how we operate. We only have a dozen employees, which is kind of unusual, considering our inflows, and maybe our AUM.

We had $150 million in assets in the first five days of BLOK. Bitcoin was at $18,000 then. And then crypto prices just kept going down and down, crypto interest swooned, and blockchain hadn’t really delivered a lot of headline-grabbing events. We went down to about $70 million [in AUM] in that ETF.

And now we've gone from $70 million to $1.4 billion, partly because BLOK has a 0.7 correlation to bitcoin. And now bitcoin's gone to nearly $60,000. We've persevered through that time. My thought is that you could offer unique exposure and eventually, that alpha shows.

The funny thing is, as a small sponsor, we're still not on a lot of platforms. BLOK is a five-star fund. BLOK has outperformed GBTC since it launched, which a lot of people don't even fathom. But we're up 20% more than GBTC since BLOK's launch. And everyone's crying for a crypto ETF. We're like, “Well, you could buy BLOK and outperform the largest crypto-packaged product out there since 3 1/2 years ago.”

ETF.com: And you have an active marijuana ETF, the Amplify Seymour Cannabis ETF (CNBS).

Magoon: Last year, CNBS was the second-best performing cannabis ETF, next to the AdvisorShares Pure Cannabis ETF (YOLO), and within a few hundred basis points of YOLO. That’s fine. MSOs did pretty well. And they have exposure there. This year, CNBS is the second-best performer, again, but it's second to the Global X Cannabis ETF (POTX). POTX was down 30% last year. And it's bounced like crazy this year as well. And we're still up 80%.

We're trying to see around corners, be involved with things early, provide that exposure. One of our next stages of growth is to try to be on more platforms.

One of the risks to our firm is, the stuff that we're doing that's successful is getting copied more quickly now. And the copies are usually not as good, because they're usually with groups that aren't as nuanced, in terms of doing the research on what companies may be best qualified, or maybe how to optimize the waiting scheme.

We're going to launch a few more products this year that hopefully will be the next IBUY or whatever. For us, we don't have to have billion-dollar funds.

Drew Voros can be reached at dvoros@etf.com

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