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ETF Areas to Gain From the Holiday Shopping Season

Sweta Jaiswal, FRM
·5 min read

The year 2020 has been quite a challenge for market participants as well as business houses, largely due to the coronavirus outbreak. Various sectors had to suffer from a shutdown of business activities and a sudden change in lifestyle and preferences of Americans.

Amid these trying times, the beginning of holiday season (the late October-December period) provides a ray of hope for a lot many industry players and market participants. Moreover, this time of the year is also a very important phase for a large number of companies from the business point of view. The quarter is also marked by some popular retail events like Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas, which increase its significance to retailers.

According to Deloitte’s report on holiday spending forecasts, retail sales may see growth of 1-1.5% during the November-January period, per a CNBC article.

Against this backdrop, let’s study some ETFs that are well-positioned to gain from a busy shopping season this year:

Online Retail ETFs to Keep Shining

The pandemic has been a blessing in disguise for the e-commerce industry as people continue to practice social distancing and shopping online for all essentials, especially food items. Thus, at par with the digitization trend, the upcoming U.S. holiday season is expected to see a significant surge in online sales. Going by a Total Retail article, e-commerce sales are anticipated to grow more than 20% this year as there is a surge in first-time online shoppers. Also, according to a report from Statista, the e-commerce space is projected to cross revenues of $2.3 trillion in 2020.

Against this backdrop, let’s look at some ETFs that can benefit from the new shopping trend: Amplify Online Retail ETF IBUY, ProShares Long Online/Short Stores ETF CLIX, ProShares Online Retail ETF (ONLN) and Global X E-commerce ETF (EBIZ) (read: Can ETFs Enjoy Halloween Effect Despite Rising COVID-19 Fear?).

Consumer Discretionary ETFs Popularity to Rise

There has been improvement in consumer spending and confidence after the pandemic-induced record decline in March.As restrictions were being relaxed in the United States, a number of restaurants and retailers started resuming business during the post-lockdown period. Therefore, the reopening of U.S. states brought optimism for players in the consumer discretionary sector and gained investors’ attention. Even during the holiday season, the sector is expected to see a boost in sales and demand as it attracts a major portion of consumer spending. Thus, to make the most of the opportunity, investors can consider The Consumer Discretionary Select Sector SPDR Fund XLY, Vanguard Consumer Discretionary ETF VCR, First Trust Consumer Discretionary AlphaDEX Fund FXD and Fidelity MSCI Consumer Discretionary Index ETF (FDIS) (see all Consumer Discretionary ETFs).

Digital Payments ETFs to See Increased Demand

Along with increased interest in online shopping, customers are resorting to digital payments to clear their bills. At the same time, merchants and utility providers are increasingly advocating the same. According to Statista, total transaction value in the Digital Payments segment should see 15.3% year-over-year growth rate in 2020 on a 5.4% rise in user count.

In such a scenario, investors can take a look at ETFMG Prime Mobile Payments ETF IPAY, Tortoise Digital Payments Infrastructure ETF TPAY and Global X FinTech ETF (FINX) (read: 5 ETFs to Ride the Popular Trends Amid Coronavirus Crisis).

Transportation ETFs to Gain

This holiday season appears to be a comparatively strong period for retailers. Moreover, the growing inclination toward ecommerce has resulted in a wider reach for players in the retail space. That’s why there should be a surge in demand for freight services to deliver the products ordered online. In such a scenario, investors can consider iShares Transportation Average ETF IYT.

Video Gaming ETFs to Get a Holiday Season Boost

Amid the health crisis, adults and kids are looking for some indoor fun activities during leisure time, which is resulting in a boom in the video game industry. Highlighting this fact, the latest report from The NPD Group  predicts that consumer spending on video games in the United States may touch $13.4 billion this holiday season (November and December 2020), surging 24% year over year. Additionally, the upside is largely expected to be led by console hardware, headsets, gamepads, mobile, digital full-game and post-launch content on console and PC, and subscription.

There are a number of reasons that can drive the sales of video games in the upcoming holiday season. An aggravating coronavirus outbreak, limitations or restrictions on some outdoor entertainment options like theme parks, amusement parks, travels or sports tickets, new consoles, increasing player engagement and number of players can take the video gaming industry to new highs, per the above-mentioned report. To gain from the ongoing boom in the video game industry, investors can consider VanEck Vectors Video Gaming and eSports ETF ESPO and Global X Video Games & Esports ETF (HERO) (read: Trade With Low Beta Sector ETFs Ahead of Election).

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iShares Transportation Average ETF (IYT): ETF Research Reports
 
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
 
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
 
First Trust Consumer Discretionary AlphaDEX ETF (FXD): ETF Research Reports
 
Amplify Online Retail ETF (IBUY): ETF Research Reports
 
ETFMG Prime Mobile Payments ETF (IPAY): ETF Research Reports
 
ProShares Long OnlineShort Stores ETF (CLIX): ETF Research Reports
 
VanEck Vectors Video Gaming and eSports ETF (ESPO): ETF Research Reports
 
Ecofin Digital Payments Infrastructure Fund (TPAY): ETF Research Reports
 
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