ProShares has launched the ProShares Online Retail ETF (ONLN US), enabling investors to participate in the continued upside potential of the online retail theme in a single trade.
ONLN is the third addition to ProShares’ lineup of “Retail Disruption” ETFs.
Listed on the NYSE Arca, the passively managed ETF invests in companies principally selling online or through other non-physical-store channels, such as mobile or app purchases.
“Retail shopping is increasingly moving away from bricks-and-mortar stores and going digital, and the companies driving sales in this rapidly growing marketplace present an opportunity for investors,” said Michael L. Sapir, co-founder and CEO of ProShare Advisors.
“Rather than investing in an individual company, investors can now get exposure to Amazon, Alibaba and other global leaders in online retail with a single ticker: ONLN.”
The ETF tracks the ProShares Online Retail Index which consists of both US and non-US companies listed on a US stock exchange.
To be eligible for inclusion in the index, a stock must be classified as an online retailer, an e-commerce retailer, or an internet or direct marketing retailer, according to standard industry classification systems.
Size and liquidity filters are also applied – firms must have a market cap of more than $500 million and a six-month daily average value traded of $1m to make the cut.
Constituents are weighted by market capitalization with certain constraints enforced. No company may exceed 24% at rebalance and the sum of companies individually weighing more than 4.5% must not exceed 50% of the index value. The total weight of all non-US companies is also capped at 25%.
The index is rebalanced monthly and reconstituted on an annual basis.
There are currently 21 constituents in the index, dominated by Amazon (24.2%) and Alibaba (15.5%). The next eight stocks in the index each hold an approximate 4.5% weight. The index shows an average constituent market cap of $78bn, although this is swayed by the two largest companies.
US firms account for three-quarters (75.5%) of the total exposure. China is the next largest country exposure with 21.5%, followed by Argentina with 3.0%.
Income distributions are made to investors on a quarterly schedule. It has an expense ratio of 0.58%
The fund is the third product in the issuer’s lineup of “Retail Disruption” ETFs, following the launch of the ProShares Decline of the Retail Store (EMTY US) and ProShares Long Online/Short Stores ETF (CLIX US) on NYSE Arca in November 2017.
EMTY provides daily inverse exposure to the Solactive-ProShares Bricks and Mortar Retail Store Index, allowing investors to benefit from potential erosion of the value of retailers that rely principally on in-store sales. It has approximately $25m in assets under management and an expense ratio of 0.65%.
CLIX, on the other hand, tracks the ProShares Long Online/Short Stores Index, combining a 100% long portfolio of online and non-traditional retailers with a 50% short position in bricks-and-mortar retailers. The fund thereby provides investors with the opportunity arising from both the potential growth of online companies and the decline of bricks-and-mortar retailers. It has approximately $60m in AUM and an expense ratio of 0.65%.
The online retail fund will compete with the Amplify Online Retail ETF (IBUY) from Amplify ETFs, which has accumulated $500m in assets since its inception just over two years ago. This fund, which tracks the EQM Online Retail Index, also invests in a portfolio of companies generating significant revenue from online and virtual sales. Its expense ratio is 0.65%
Analysts expect the growth of online retail to continue. Today, about 10% of global retail sales are made online, which leaves tremendous room for growth. Recent data indicates that online sales growth could double by 2030.