E-commerce ETF and E-commerce Fund: Two Investments to Profit from Guaranteed Growth
Sam Subramanian PhD, MBA
During times when sustained growth of the U. S. economy appears less than certain, e-commerce ETF and e-commerce fund represent two investments that can deliver solid gains from virtually assured growth of the e-commerce industry.
According to Forrester Research, the U. S. e-commerce industry grew 12.6% in 2010 to $176 billion. The market research firm expects the U. S. e-commerce industry to expand by 60% to $279 billion in 2015.
The growth of e-commerce in retailing & entertainment, advertising, and travel can support the industry's expansion.
E-commerce Stocks in Retailing & Entertainment
The number of consumers shopping online is increasing as unemployment levels rise, transportation costs soar, and e-retailers provide incentives like free shipping. Smartphones and tablet computers are the most popular items sold online.
Improvement in download speed and reliability is prompting increasing number of consumers to fulfill their entertainment wants online. Purchases or renting of books, music, video, and games are rapidly moving online.
Amazon.com (AMZN) and eBay (EBAY) are dominant online retailers while Netflix (NFLX) has entrenched itself in online movie delivery. Groupon, which is reshaping e-commerce with short-life discount coupons from local stores, has filed an S-1 with the intent of becoming public.
E-commerce Stocks in Advertising
Online ad spending in the U. S. is poised for strong growth as more people spend more time online. eMarketer forecasts ad spending to increase by over 20% to $31 billion in 2011 as new formats like video and new channels like mobile and social media gain adoption.
While search accounts for a major share today, growing popularity of video and brand-building ads is helping display ad spending to power ahead. Spending on display ads is expected to exceed spending on search ads by 2015.
Investment opportunities here include shares of search leaders Google (GOOG), Yahoo! (YHOO), and Microsoft (MSFT). Smaller service providers like ValueClick (VCLK) represent potential takeover plays. Facebook and LinkedIn (LNKD) are capitalizing on the growing popularity of social media.
E-commerce Stocks in Travel
eMarketer estimates online sales of leisure and unmanaged business travel in the U. S. will increase 8.5% this year on higher airfares, hotel rates, and ancillary fees. Nearly 11.8 million new users are forecasted to make their travel booking through mobile devices.
Overseas, online airline ticket purchases and hotel reservations are increasing at a breakneck pace. Growth is notably strong in China, South Korea, Brazil, Russia and India from both increasing domestic and international travel.
Online travel and related services companies like Expedia (EXPE), priceline.com (PCLN), and to a lesser extent Orbitz Worldwide (OWW) stand to benefit from the increase in online bookings.
Investing in E-commerce ETF and E-commerce Fund
E-commerce ETF Examples
First Trust DJ Internet Index ETF, FDN
PowerShares NASDAQ Internet, PNQI
E-commerce Fund Examples
Fidelity Select IT Services, FBSOX
Fidelity Select Software, FSCSX
Firsthand Technology Opp Fund, FTEQX
Internet UltraSector ProFund, INPIX
Jacob Internet, JAMFX
Kinetics Internet, WWWFX
Rydex Internet, RYIIX
You can profit from the e-commerce industry's growth by investing in e-commerce stocks mentioned above. However, investing in an individual e-commerce stock carries company-specific risk. You can reduce such risk by investing in e-commerce sector ETFs and sector mutual funds. E-commerce ETF and e-commerce fund examples are provided in the inserts.
Beat the Market with Best E-commerce ETF and E-commerce Fund Investments
While secular growth characteristics make e-commerce ETF and e-commerce fund investments suitable for long-term investing, you can use such investments as part of a broader sector investing strategy to earn bigger rewards.
Like most sector investments, e-commerce ETF and e-commerce fund investments periodically come in and go out of favor based on investor’s view of near-term prospects for e-commerce stocks.
AlphaProfit's Premium Service helps you invest in the best e-commerce ETF and the best e-commerce fund at the right time. When the timing is just not right for e-commerce ETF and e-commerce fund investments, you will stay away from them and invest in only the best sector ETFs and
best sector mutual funds in top ranked sectors.
The sector ETF and sector fund model portfolios use AlphaProfit's proven ValuM investment process for selecting investments. This process has enabled AlphaProfit model portfolios to bag Dow Jones Hulbert Financial's #1 rank numerous times.
A dollar invested in the AlphaProfit's Aggressive Growth (ETF-Focus) and Capital Appreciation (ETF-Core) model portfolios is worth $45.41 and $22.27, respectively. This implies annualized returns of 21.0% and 16.8%, respectively.
Performance of ETF model portfolios as of December 31, 2013.
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Comparable investments in the Dow Jones Wilshire 5000 and S&P 500 benchmarks are worth $5.96 and $5.84, respectively implying annualized returns of 9.3% and 9.2%, respectively.
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