Lower-Cost Online Retail ETF Debuts

ProShares has rolled out an ETF that will the be the second U.S.-listed ETF to focus on long exposure to companies that derive significant revenues from online sales. The ProShares Online Retail ETF (ONLN) will go head to head with the nearly $500 million Amplify Online Retail ETF (IBUY).

ONLN comes with an expense ratio of 0.58%, several basis points cheaper than IBUY’s 0.65% price tag. It’s listed on the NYSE Arca.

The new fund tracks an in-house index covering the stocks or depositary receipts of domestic and foreign companies that mainly conduct their retail operations online or through other electronic means instead of physical stores; essentially, they must be classified as an online or e-commerce retailer or an internet or direct marketing retailer by the classification system used by ProShares, the prospectus says.

The index requires that securities meet liquidity thresholds and have at least $500 million in market capitalization, with foreign firms capped at 25% of the index. It is weighted by modified market capitalization, with individual companies capped at 24% of the index and companies weighted at more than 4.5% of the index capped at an aggregate weight of 50% of the index, according to the document.

The prospectus also notes that ProShares believes “investing in Online Retailers is attractive because online sales have been rapidly rising and ProShare Advisors believes this trend will continue.”

Certainly, the firm has clearly made a bet on the success of online retail: ONLN is its third ETF to offer investors a way to play this trend. In November, ProShares rolled out the ProShares Decline of the Retail Store ETF (EMTY) and the ProShares Long Online/Short Stores ETF (CLIX), which currently have $20.5 million and $61.6 million in assets under management, respectively.

Contact Heather Bell at [email protected]