Top ETF Deals for Cyber Monday


The holiday season ushers in with retailers giving thanks for surging e-commerce sales and record-breaking Internet traffic during the Thanksgiving weekend. Online sales in the U.S. rose 15% from last year to $1.198 billion on Black Friday, making it the season’s first billion dollar day while Thanksgiving Day online sales jumped 21% to $766 million, as per the Web analytics company firm, ComScore.

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Going by ComScore estimates, “Cyber Monday” will likely surpass Black Friday sales and may be the biggest online spending day in U.S. history. The firm sees sales reaching about $2 billion on the day, up nearly 37% from last year. This is because more consumers will shop online on the day via their mobile devices.

A weekly survey by Nielsen Co. of 1,000 Americans revealed that 46% of customers plan online shopping on Cyber Monday, up from 30% a year ago (read: 3 ETFs For This Holiday Season).

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How Hot is “Cyber Monday”? 

Cyber Monday is the biggest e-commerce sales day of the year. Moreover, most retailers are extending their cornucopia of deals for Cyber Monday to the Cyber Week (December 1–7).

The top firm tapping this opportunity is the online behemoth (AMZNAnalyst Report). The company is offering “Lightning Deals” that change every 10 minutes. Hot on their trail is eBay Inc. (EBAYAnalyst Report), which is offering a wide range of deals from technology to clothing. The company has increased its mobile app features to lure customers to the net.

The traditional brick-and-mortar retailer, Wal-Mart Stores (WMT), is in the third position to gain investor attraction on the day. The company is kicking off new deals every day through December 6 and lowered its free shipping to a minimum of $35. Apart from these, there are several other retailers, which are catching investor eye with sizzling deals.

Best Buy (BBY) is offering special “Can’t-Miss’ deals for December 1 and 2 only, while providing new deals every day of the Cyber week with free shipping on purchase of minimum $25. Additionally, Best Buy is providing $10 off on every purchase of $100 for both Cyber Monday and Cyber Week.

The Cyber Week deals for Target Corp. (TGT) include free shipping for men’s, women’s and children’s apparel, accessories, jewelry and shoes. The company is offering buy one and get 60% off on another purchase. Gap Inc. (GPS) is also providing 40% off in-stores and online for Cyber Monday.

J.C. Penney (JCP) and Macy’s (M) started offering their deals on Sunday (read: Is This ETF a Better Bet in the Consumer Space?).

How to Play

Given the attractive deals, investors seeking to tap “Cyber Monday” benefits in a diversified way should focus on the ETFs that are engaged in the e-commerce corner of the broad retail/tech industry. We have highlighted a few of them below:

First Trust Dow Jones Internet Index (FDNETF report)

This is one of the popular and liquid ETFs in the broad tech space with AUM of over $1.7 billion and average daily volume of nearly 280,000 shares. The fund tracks the Dow Jones Internet Composite Index and charges 57 bps in fees per year. In total, the fund holds a small basket of 41 stocks with 62% allocated to large caps and a definite tilt toward growth stocks.

Google (GOOG) dominates the fund’s return with more than 11% share, while AMZN and Facebook (FB) round off the top three at 9.21% and 6.19%, respectively. From a sector look, the Internet and mobile segment account for more than half the portfolio, followed closely by Internet retail at 26% of assets.

The product gained about 45% year-to-date and has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a ‘Medium’ risk outlook (read: Top Ranked Internet ETF in Focus: FDN).

PowerShares Nasdaq Internet Portfolio (PNQIETF report))

This fund follows the Nasdaq Internet Index, giving investors exposure to the broad Internet industry. The fund holds over 81 stocks in its basket with AUM of $240.3 million while charging 60 bps in fees per year. This product sees light volume of under 48,000 shares a day.

The ETF is heavily concentrated on the top 10 holdings with largest allocations made to AMZN, (PCLN) and GOOG. The product focuses on large caps with three-fifth of the portfolio while growth stocks account for 76% exposure. In terms of industries, Internet & mobile application make up for two-third share in the basket, followed by Internet retail and software & programing (see: all the Technology ETFs here).

PNQI added nearly 56.4% so far this year and currently has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a ‘High’ risk outlook.

Market Vectors Retail ETF (RTHETF report)

This fund provides exposure to the 26 largest retail firms by tracking the Market Vectors US Listed Retail 25 Index. The top three holdings include AMZN, WMT and Home Depot (HD) which combine to take up nearly 25% of assets.

The ETF has a certain tilt toward growth stocks, accounting for half of the portfolio, while sector wise, specialty retail has one-third share. Other sectors such as hypermarkets, departmental stores and healthcare services take double-digit exposure (read: The Comprehensive Guide to Retail ETFs).

The product has amassed $41 million in its asset base and charges 35 bps in annual fees. Volume is low as it exchanges nearly 47,000 shares per day. RTH is up over 39% in the year-to-date time frame and still has room for upside given the Zacks ETF Rank of 2 or ‘Buy’ rating with a ‘Low’ risk outlook.

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