Profit From Retail Disruption With These ETFs

In this episode of ETF Spotlight, I talked with Kieran Kirwan, Senior Investment Strategist at ProShares.

ProShares is well known for its dividend growth, alternative and leveraged and inverse ETFs. They also have a suite of products focused on retail disruption.

Americans are spending more thanks to tax cuts, tightening labor markets and rising stock prices. And a growing number of consumers now prefer to shop online. Shifting consumer preferences and technology advances have resulted in disruptive changes in the retail space.

First off, we discussed how the retail industry is undergoing massive disruption.

Over the past decade, global e-commerce has been growing at an average rate of 20% per year, according to the Economist. But the trend is just getting started.Online shopping amounts to less than 10% of the world’s retail spending, so there is tremendous room for growth.

Kieran explained why these growth trends could continue.

Last month, ProShares launched the Online Retail ETF ONLN, which focuses on global e-commerce companies.

And while the Amplify Online Retail ETF IBUY is equally weighted, ONLN focuses on the largest players in the space like Amazon AMZN and Alibaba BABA. Amazon gets almost 25% of the portfolio weighting and Alibaba about 15%.

As online sales are growing, brick and mortar stores are witnessing declining sales. Kieran highlighted some of the most visible indicators of the weakness in traditional retail.

ProShares also offers the Long Online/Short Stores ETF CLIX that provides long exposure to online retailers and short exposure to traditional brick and mortar retailers. And the ProShares Decline of the Retail Store ETF EMTY provides inverse exposure to bricks-and-mortar retailers.