Amplify ETFs has launched the Amplify International Online Retail ETF (XBUY US) on NYSE Arca, providing exposure to international companies expected to benefit from the increased adoption of e-commerce.
Companies must derive at least 90% of their revenue from online and virtual retail sales to be eligible for the fund’s index.
“Many of the fastest growing e-commerce markets reside outside of the US, primarily in developing countries where mobile devices are stoking demand,” said Christian Magoon, CEO of Amplify ETFs.
“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 US.”
The fund tracks the EQM International Ecommerce Index which consists of stocks from both emerging and developed market countries, excluding the US, that have a minimum market capitalization of $100 million and an average daily trading volume of at least $1m over the past six months.
To be eligible for selection, stocks must derive at least 90% of their revenue from online and virtual retail sales (as opposed to ‘brick and mortar’ store transactions) from at least one of three business segments: retail, travel, and marketplace.
The index utilizes a modified equal weighting methodology subject to the following constraints: country weights are capped at 25%, and the weights of the least liquid 20% of constituents are reduced by 50% and redistributed equally amongst those constituents in the top 80% by liquidity. Rebalancing occurs on a quarterly basis.
The fund currently contains 45 holdings. China and Japan represent the largest country exposures with weights of 28% and 23%, respectively, followed by the UK (11%), Germany (7%), and India (6%). There is a leaning towards small and mid-caps with 45% of the total weight currently allocated to stocks with less than $2 billion market capitalization and a further 36% allocated to stocks between $2bn and $10bn; the rest is in large-caps.
XBUY comes with an expense ratio of 0.69%.
The fund serves as a complement to Amplify’s flagship product, the Amplify Online Retail ETF (IBUY US), which currently houses over $300m in assets under management. IBUY provides exposure to e-commerce companies globally, although the cumulative weight of non-US companies is capped at 25%. Its expense ratio is 0.65%.