Welcome to ETF Of The Week, a designation given to the most newsworthy or notable fund of the past seven days.
With the Supreme Court ruling on Monday that the federal government couldn't force states to make sports betting illegal, BJK—the only pure-play gambling ETF—is sure to see some benefit. Eventually. Maybe. You see, despite jumping 4% this week, BJK didn't actually see any new net inflows, according to our Fund Flows Tool. The fund seems to be flying under investors’ radar.
Not so for IBUY, which briefly surged past the SPDR S&P Retail ETF (XRT) this week to become the largest ETF in the retail sector. Though XRT has since reclaimed its throne, IBUY is still nipping at its heels, with $344 million in assets under management, compared with XRT's $400 million.
IBUY's popularity no doubt stems from its enthusiastic embrace of online shopping: The fund holds only companies that earn at least 70% of their revenues from online sales. And online is an increasingly necessary space for retailers to be.
Of the many retailers who reported their quarterly earnings this week, the few that reported better-than-expected results specifically pointed to e-commerce as their secret sauce. Macy's, for example, saw strong earnings based on its partnership with Tmall, a Chinese online shopping platform. Walmart, meanwhile, reported solid growth from its considerable investment into online grocery delivery and a revamped e-shopping experience. Walmart also purchased a controlling stake in Flipkart, India's biggest online retailer.
How IBUY Works
That said, Macy's and Walmart don't appear in IBUY (yet). Instead, IBUY's portfolio is a diverse blend of online-only department stores, travel agencies, clothing sellers, drug stores, even food-ordering sites. At present, there are 39 names in IBUY, at least 75% of which, by rule, must come from the U.S. (currently, 77% do).
Within its two geographic buckets, IBUY weights its stocks equally. Not only does that prevent e-commerce giants like Amazon from dominating the fund, it introduces a small-cap tilt. The firm with the largest weighting in IBUY is TripAdvisor, a $6.6 billion company, while $763 billion Amazon doesn’t even fall into the top 15 companies.
IBUY charges 0.65% in expense ratio, which isn't cheap compared with other retail ETFs, like XRT or the VanEck Vectors Retail ETF (RTH). But IBUY has also left them in the dust, performancewise. Over the past year, IBUY is up a whopping 36.8%, compared with XRT's 14.4% and RTH's 20.3% gains.
IBUY is currently up 12.1% year-to-date.
Contact Lara Crigger at [email protected]