E-commerce ETFs fail to mimic 2020 success

E-commerce ETFs are heading for their sixth straight month of net outflows, having lost over $586 million in the second half of the year. The biggest blows came in October and November with net outflows of $145 and $214 million respectively. The year will likely end with roughly half a billion of net outflows, compared a stellar $1.74 billion in net inflows the year before. Amplify Online Retail ETF (IBUY) is to mostly to blame with over $584 million of net outflows year-to-date. In contrast, L&G Ecommerce Logistics UCITS ETF (ETLH) attracted $106 million of net inflows.

2020 was the year that catapulted the E-commerce theme's popularity to the top ranks of the ETF universe as e-commerce stocks exploded amid pandemic-induced shutdowns and lockdowns.  With internet access widely available, over two billion people purchased goods or services online in 2020, pushing global e-retail sales to $4.28 trillion U.S. dollars worldwide, a 27% increase from the prior year. In June 2020, global retail e-commerce traffic stood at a record 22 billion monthly visits, with demand being sky-high for daily items such as groceries, clothing, and technology items (phones, laptops, gaming gadgets etc…). Fast-forward to 2021, e-commerce cooled off after the vaccine rollouts paved way for the reopening of economies, including grocery shops, restaurants, clothing stores, among others.

Despite the retreat, E-commerce ETFs ($2.07 billion in total assets) represent a great opportunity for investors betting on higher digital inclusion and adoption in various retail industries. The biggest ETFs in the line-up include ProShares Online Retail ETF (ONLN), Amplify Online Retail ETF (IBUY), and L&G Ecommerce Logistics UCITS ETF (ETLH) among others. 

While other ETFs in the pack fell between 10-25% this year, ETLH is the only ETF with positive returns (+17%). The LGIM fund tracks the Solactive Ecommerce Logistics Index and provides exposure to a basket of stocks of logistics service providers and technology companies who are engaged in e-commerce like UPS, eBay, Alibaba, JD.com, and Kerry Logistics.

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