CLIX Over Bricks: Going Shopping With A Couple Of New Retail ETFs

Two existing exchange traded funds tell the tale of the retail tape this year. The SPDR S&P Retail ETF XRT, the largest retail ETF, is down about 7.5 percent while the newer Amplify Online Retail ETF IBUY is up 35 percent and resides near record highs.

With that dichotomy in mind, two new ETFs from ProShares could prove to be well-timed.

On Thursday, Maryland-based ProShares introduced the ProShares Decline of the Retail Store ETF EMTY and the ProShares Long Online/Short Stores ETF CLIX. ProShares is the largest issuer of inverse and leveraged ETFs.

“EMTY is the first ETF designed to allow investors to benefit from the potential on-going erosion of value of retailers that rely principally on in-store sales,” ProShares said in a statement. “It provides consistent, daily short exposure (-1x) to the new Solactive-ProShares Bricks and Mortar Retail Store Index. The ETF is designed to deliver the inverse (opposite) of the daily performance of the index.”

Death Of The Mall Plays

This year, investors are hearing plenty about the death of the traditional mall and varying issues faced by brick-and-mortar retailers, many of which are being inflicted by Amazon.com, Inc. AMZN.

“Physical retailers are under immense pressure. E-commerce is threatening to take over retail as consumer habits change, shopping moves online, and physical stores struggle to remain viable. With this disruption comes opportunity,” according to ProShares.

EMTY's underlying index features short exposure to department stores, grocery stores, apparel retailers and consumer electronics stores. Well-known names in the index include Macy's Inc M and Best Buy Co. BBY.

“Over 30 major retailers have declared bankruptcy over the past three years, with almost two-thirds of those in 2017. Some analysts predict that online sales growth will outpace bricks and mortar retailers 3 to 1 by 2020 and contribute to the pressure within the traditional retail space,” according to ETF Trends.

CLIX Over Bricks

As highlighted by the aforementioned comparison of IBUY and XRT, online retailing is soundly thumping brick-and-mortar. The ProShares Long Online/Short Stores ETF looks to capitalize on that trend.

CLIX “is the first ETF to provide investors opportunities arising from both the potential growth of online companies and the decline of bricks and mortar retailers. It tracks the new ProShares Long Online/Short Stores Index which combines a 100% long portfolio of on-line and non-traditional retailers with a 50% short position in bricks and mortar retailers,” according to ProShares.

Long positions in CLIX include Amazon, Alibaba Group Holding Ltd. BABA and eBay Inc. EBAY. Both new ETFs charge 0.65 percent per year, or $65 on a $10,000 investment.

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