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Soaring E-Commerce Sales Could Boost These ETFs


Some of us are old enough to remember back to the Dark Ages, say the 1980s or early 1990s, when the concept of e-commerce did even exist. These days, e-commerce giants such as Amazon.com (AMZN) and eBay (EBAY) are among the most recognizable brands in the U.S. retail industry.

While Amazon, eBay and some related companies are certainly considered growth stocks, there might be plenty of growth ahead for these firms. Global e-commerce sales are expected to rise 17.5% this year to $963 billion, up from $820.5 billion last year , reports Brian Deagon for Investor’s Business Daily. The IBD piece also notes that while e-commerce sales currently account for just 6.5% of all retail sales, online sales are growing four times as fast as traditional retail and e-commerce’s slice of the total retail pie is expected to expand to 9.3% by 2016. 

That could prove to be good news for a select group of ETFs, including the First Trust Dow Jones Internet Index (FDN) . FDN allocates nearly 14% of its weight to Amazon and eBay and that pair represents the ETF’s second- and third-largest holdings. Investors should not overlook the fact that FDN has one of the largest weights to Google (GOOG), itself a growing e-commerce force. Google accounts for 10% of FDN’s weight. [ETF Spotlight: Internet Sector]

Investors can also opt for the PowerShares NASDAQ Internet Portfolio (PNQI) . Though smaller than FDN, PNQI features a healthy 24% combined weight to Amazon, Google and eBay, in that order. Both ETFs have annual fees of 0.6%. [Amazon Lifts Retail ETFs]

Another important element to the e-commerce equation is that traditional brick-and-mortar retailers have been steadily increasing their online options for consumers for fear of losing out to the Amazons and eBays of the world. Wal-Mart (WMT) and Target (TGT) are best-known for their massive stores, but both companies and others are boosting their online footprints.

With that in mind, investors looking for a more conservative approach to rising e-commerce sales may want to consider the Market Vectors Retail ETF (RTH) . Wal-Mart, Amazon and Target combine for over 23% of that ETF’s weight. RTH may be small with just $35.2 million in assets under management, but the fund has offered big returns with an almost 24% gain in the past year.

Market Vectors Retail ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Amazon and Google.



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.