The story is corrected to reflect the correct fund name and ticker for a ProShares product originally identified as the Decline of the Retail Stores ETF.
Black Friday won’t be the same this year – though maybe that’s not such a bad thing.
If you’d like to observe the day by staying home and shopping virtually for investments, rather than busting down the door of your nearest shopping mall, here are some of the best exchange-traded funds for Black Friday.
Of all the retail ETFs , Dave Nadig, an ETF industry vet now at ETF Database, thinks ProShares Online Retail ETF /zigman2/quotes/208410191/composite ONLN -2.49% is “the way to go.” Nadig likes Proshares’ methodology, he said in an interview, and thinks the resulting portfolio is the most pure-play approach to e-tail out there.
That can be a plus – as long as investors know what they’re getting. “Pure-play” can mean “very concentrated.” Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -0.74% , ONLN’s top holding, accounts for nearly one-quarter of the portfolio, which holds many of the biggest winners in the online retail space, including Chewy inc. /zigman2/quotes/212690528/composite CHWY -5.69% , Etsy Inc., /zigman2/quotes/202790087/composite ETSY -3.36% and Overstock.com Inc /zigman2/quotes/200022359/composite OSTK -7.10% .
ONLN has returned 97% in the year to date, so investors will have to think carefully about how much upside they think is left for the sector, Nadig noted. Some competitors include the Amplify Online Retail ETF /zigman2/quotes/206522380/composite IBUY -2.86% and the Global X E-commerce ETF /zigman2/quotes/201703903/composite EBIZ -2.09% , which also holds shares of online infrastructure companies, such as Shopify /zigman2/quotes/209033712/composite SHOP -0.71% .
For investors who “want to go really tactical,” Nadig recommends another ProShares product, the Long Online/Short Stores ETF /zigman2/quotes/207285925/composite CLIX -2.09% . It goes long 100% online retailers, but it then shorts out brick and mortar retailers. “The net portfolio is thus only 50% exposed to the market, so while it may sound super volatile, it’s actually quite tame,” he said.
If, unlike Nadig, you’re willing to bet on a broader mix of retailers, including some that are still primarily bricks and mortar, the SPDR S&P Retail ETF /zigman2/quotes/206947004/composite XRT -2.36% offers exposure to everything from Advance Auto Parts Inc. /zigman2/quotes/202065737/composite AAP -2.12% to Zumiez Inc. /zigman2/quotes/210420137/composite ZUMZ +0.42% It has some darlings of the pandemic, like Camping World Holdings Inc. /zigman2/quotes/210208311/composite CWH -3.29% , and some old-school names like Tractor Supply Co /zigman2/quotes/202009274/composite TSCO +0.66% .
The First Trust Nasdaq Retail ETF /zigman2/quotes/208123106/composite FTXD -0.49% is a competitor. It’s gained about 15% in the year to date, less than half the 32% return enjoyed by XRT.