5 types of ETFs that contact Amazon (FDIS, XLY, VCR, RTH, FDN)

Amazon.com, Inc. (AMZN) dominates the retail industry. The company maintained a diversified business; demonstrated unremitting innovation and achieved sustained revenue growth. In addition, Amazon enjoys sustained profitability, strong cash flow, a healthy balance sheet and impressive stock appreciation.

On the other hand, as of May 2020, Amazon’s 12-month P/E ratio is now 116.62.For analysts, this means that any unexpected bad news could lead to a sudden free fall in stocks. For many years, the investment community has been worried about this potential downside risk of Amazon stock (not yet realized).

What do investors do?

All of these can lead to investor confusion. You want to invest in Amazon, but you don’t want to end up as a bag holder entering the industry before the fall. Instead of investing directly in AMZN, you can invest in an exchange-traded fund (ETF), which has stocks as one of its largest holdings. Although this method will not protect you in the event that AMZN crashes, it will help limit any potential losses because you will become diversified.

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Use Amazon Exposure to enter ETF

According to Amazon’s weight, the five ETFs cited below have AMZN as the largest holding. If you are interested in a diversified investment approach to this stock, then these funds may be worth exploring as an alternative to buying AMZN personal stock. As with any investment, you should thoroughly consider the facts and figures of each ETF to determine the investment objective that best suits you.

1) Fidelity MSCI Consumer Discretionary Index ETF (FDIS)

  • Amazon weight: 31.29%
  • Issuer: Fidelity
  • Tracking: MSCI US IMI Consumer Discretionary Index Price and Yield
  • Start: 10/21/13
  • Expense rate: 0.08%
  • Assets under management: US$693.3 million
  • Average daily transaction volume (90 days): 174,246
  • Average spread: 0.22%

2) SPDR Consumer Discretionary Goods Selected Industry Fund (XLY)

  • Amazon weight: 23.25%
  • Issuer: State Street Global Advisors
  • Tracking: Price and Yield of Consumer Discretionary Selected Industry Index
  • Start: 12/16/98
  • Expense rate: 0.13%
  • Assets under management: $13.1B
  • Average daily transaction volume (90 days): 6,500,462
  • Average spread: 0.03%
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3) Vanguard Consumer Discretionary ETF (VCR)

  • Amazon weight: 27.13%
  • Publisher: Pioneer
  • Tracking: MSCI US IMI/Consumer Discretionary Securities 25/50 Price and Yield
  • Time of establishment: 01/26/04
  • Expense rate: 0.10%
  • Assets under management: $3.0B
  • Average daily transaction volume (90 days): 141,665
  • Average spread: 0.21%

4) VanEck Vectors Retail ETF (RTH)

  • Amazon weight: 23.27%
  • Publisher: Van Eck
  • Tracking: Market Vectors US Listed Retail 25 Index Price and Yield
  • Start: 12/20/11
  • Expense rate: 0.35%
  • Assets under management: US$99.5 million
  • Average daily transaction volume (90 days): 20,780
  • Average spread: 0.164%

5) First Trust DJ Internet Index Fund (FDN)

  • Amazon weight: 8.23%
  • Tracking: Prices and yields of the Dow Jones Internet Composite Index
  • Time of establishment: 06/19/06
  • Expense rate: 0.52%
  • Assets under management: $8.6B
  • Average daily transaction volume (90 days): 650,928
  • Average spread: 0.14%
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Last words

Amazon is one of the most powerful companies on the planet. It is healthy in every way and continues to steal market share from its peers, sometimes even bankrupting these competitors. If you ignore the high price-earnings ratio and global economic risks involved in this AMZN, then it will be meaningless. However, since these are important considerations for the stock, investors who want to be exposed to it may consider taking a more diversified approach through one of the ETFs listed above.

Neither Dan Moskowitz nor Carla Tardi have any positions in AMZN, RTH, XLY, FDN, FDIS or VCR.


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