Online Shopping Goes Global In This New ETF

Online shopping and e-commerce is not confined to U.S. consumers and domestic companies, such as Amazon.com Inc. AMZN.

For years, data confirmed the e-commerce boom in ex-U.S. markets, including both major developed and emerging markets. A new exchange traded fund provides access to that theme.

What Happened

The Amplify International Online Retail ETF XBUY debuted Wednesday, courtesy of Chicago-based Amplify ETFs. Amplify is the purveyor of the Amplify Online Retail ETF IBUY.

IBUY, which turns three years old in April, is the original ETF dedicated to domestic e-commerce and online retail companies. Home to over $290 million in assets under management, IBUY is not only one of the largest “next gen” retail ETFs, it is one of the biggest retail ETFs of any stripe.

Why It's Important

The Amplify International Online Retail ETF tracks the EQM International Ecommerce Index, which is provided by the same sponsor of IBUY's underlying index.

XBUY's index “seeks to measure the performance of equity securities issued by non-U.S. companies that derive at least 90% of their revenue from online business transactions or e-commerce platforms,” according to Amplify.

The new ETF holds 45 stocks, none of which exceed weights of 3.24 percent. At the geographic level, 13 countries are represented in XBUY, including four emerging markets, but China and Japan combine for over 51 percent of the new fund's geographic exposure.

“Many of the fastest growing e-commerce markets reside outside of the U.S., primarily in developing countries where mobile devices are stoking demand,” said Christian Magoon, CEO of Amplify ETFs, in a statement. “XBUY presents a compelling opportunity for investors to capitalize on this international growth, a segment where 80% of total online retail sales in 2018 were from countries outside the U.S.”

What's Next

XBUY is not dependent on large- and mega-cap stocks as 81 percent of the new ETF's components are mid- and small-cap names. Over half the new ETF's are traditional retailers while a combined 48 percent are marketplace providers and travel sites.

XBUY's annual fee is 0.69 percent, or $69 on a $10,000 investment. Familiar names in the new fund included Alibaba Group Holding Ltd. BABA and JD.com Inc. JD.

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