Ecommerce ETFs

Speedread:

• Amplify lists an international ecommerce ETF. But is ecommerce a bubble or a revolution?
• Japan gets a Topix ex-financials ETF via Mitsubishi
• In France, BNP Paribas is listing a fossil free corporate bond ETF

USA

Amplify lists international ecommerce ETF

Amplify ETF is listing an international version of its successful online retail ETF. The Amplify International Online Retail ETF (XBUY) will buy non-US ecommerce companies, via an index built by EQM, a startup based in San Diego.

The index starts with every non-US stock and removes those deemed too small or too illiquid. It then picks up companies that make 90% of their revenue from ecommerce. No explanation is given in the prospectus or index methodology pamphlet about how the revenue calculation is made or what data is used.

Companies that make the cut are then divided into two “liquidity pools”. The first pool consists of the top 80% most liquid ecommerce companies. The second of the 20% least liquid. Companies in the less liquid pool have their weight in the index reduced by 50%.

Companies are equally weighted within their pool.

Analysis - ecommerce: bubble or revolution?

Online retail has certainly been disrtuptive. Here the data is very clear.

• Bankruptcies among brick and mortar retailers are up one third
• For each percent of shopping that moves online, brick and mortar retails profit margins shrink by half a percent (Morgan Stanley’s estimates)
• The PE ratio of Amazon is 10x that of brick and mortar retailers, suggesting the market has made up its mind.

Yet there is also evidence the theme has been overplayed.

• Ecommerce makes up only 10% or so of global retail sales, data from Deloitte indicates.
• In the crucial food and beverage category, ecommerce penetration is in the low single digits.
• Much ecommerce growth is being captured by incumbents.
• Amazon still only makes only one-third of Walmart’s revenue, yet has a larger market capitalisation all the same.

We’ll have to wait to see how this theme plays out. But in the meantime, consumers are unlikely to enjoy shopping any less. And this ETF provides a useful tool for tapping what many regard as a global theme.

Japan

Maxis lists Japan ex- financial ETF

Mitsubishi subsidiary Maxis is listing a new Japan tracker that excludes financials. The MAXIS TOPIX Ex-Financials ETF (2523) will track the TOPIX Ex-Financials Index.

France

BNP Paribas Easy EUR Corp Bond SRI Fossil Free

BNP Paribas is putting the SRI in euro corporate bond, with a listing planned for the BNP Paribas Easy € Corp Bond SRI Fossil Free ETF (SRIC) in Paris in February. The fund will track the Bloomberg-Barclays MSCI Euro Corp SRI Sustainable Reduced Fossil Fuel (NTR) Index, while charging a low expense ratio of 0.20%.