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These ETFs are ready for Amazon’s Prime Time



This week could bring investors a way to get a one-day supply of great returns, an analysis from Monday shows.

Shares of Amazon.com Inc. AMZN
are widespread in exchange-traded funds. But some ETFs distribute much more of their portfolio to Amazon than others, and the company opposes direct categorization by type of fund. This is important to keep in mind now, according to Todd Rosenbult, head of ETF and mutual fund research for CFRA, as the CFRA team, like many analysts, believes the online retailer is ready to bounce off the event for the first day week.

“The pandemic may support growing demand from the recent increase in Amazon Prime membership,”

; Rosenblut wrote. By forcing consumers to stay at home, COVID-19 has helped accelerate the transition to digital solutions, including e-commerce, and increased the cost of the home, he noted.

“This year’s event needs to be further boosted by strong sales of home and consumer products, possibly setting a new record that could overshadow the subsequent Black Friday and Cyber ​​Monday sales combined,” he added.

Prime Day is actually a two-day event that is traditionally held in mid-summer. Amazon postponed the event to 2020 as it struggled to cope with demand in the first months of the pandemic blockade. Now some analysts believe the slot in mid-October could help spread the holiday shopping season by easing some of the pressure on logistics supplies.

With all this in mind, why have an ETF with Amazon in your portfolio instead of just buying the shares directly?

“ETFs provide benefits for diversification,” Rosenblut told MarketWatch. “Other consumers or retailers will also benefit from the shift to online spending.

Online sales at Walmart Inc. WMT
rose 74% in the first quarter, the company said, as locked consumers shopped from home. Target TGT
Managers said online sales rose 200 percent in the second quarter, adding, “American consumers are embracing digital shopping like never before.”

“Furthermore, while the CFRA is bullish on Amazon’s outlook, we recognize that each individual stock may stumble and is a reasonable effort to reduce the risk of holding other positions,” Rosenblut said. This means that for investors who want to invest in Amazon’s heavy funds, there are some considerations.

In her analysis, Rosenbluth notes that throughout Amazon’s history of revolutionizing retail, it has held a relatively small position in some retail-specific ETFs.

Amazon is the 15th largest and 45th largest position in the Amplify Online Retail IBUY ETF
and SPDR S&P Retail XRT,,
representing only 2.5% and 1.5% of their assets. These two funds were more exposed to smaller retailers such as Etsy ETSY
and Overstock.com OSTK.

And given its weight, Amazon extends a number of sectoral categories, Rosenblut said. The company is a conglomeration of businesses that include a huge cloud computing company, Amazon Web Services.

It occupies approximately 10% of the position in the Invesco QQQ QQQ power plant,,
iShares Russell Top 200 Growth IWY,,
and Vanguard Mega Cap Growth MGK.

It should also be noted that Amazon is not considered a technology stock for ETF purposes or stock market classification. Still, iShares has expanded the technology sector of the IGM ETF
is a rare ETF with technology that Amazon also owns, ”Rosenblut said. And although it is increasingly trying to make its presence in the category of consumer brackets, with food delivery and sales of smaller items such as toothpaste and cleaning products, it is still a technically discretionary consumer company, according to the S&P 500 categorization. of 11 main industry segments.

The table below shows the ETF with the largest exposure to Amazon shares.

ETF and ticker

Percentage

Fidelity MSCI User discretionary FDIS

32.2%

ProShares Online Retail ONLN

23.9%

Custom discretionary choice SPDR XLY

23.1%

Advanced consumer discretion VCR

22.8%

VanEck Vectors Retail RTH

19.3%

Source: CFRA

Read the following: It’s hard for buyers to avoid Amazon – even in their ETFs


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