Global e-commerce is surging.

The dot-com revolution that began two decades ago forever changed the U.S. economy by launching a host of internet technologies. There remains big future potential in many of these technologies even as they mature. Take e-commerce for example; according to industry group Digital Commerce, global e-commerce sales surged 18% in 2018 – topping a $3 trillion industry, and amounting to 15% of total retail spending worldwide. So if you missed investing in tech stocks during the dot-com craze 20 years ago, never fear – these seven tactical exchange-traded funds allow you to invest directly in online spending to capitalize on this continued trend.

Next:First Trust Dow Jones Internet Index (ticker: FDN) Credit

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First Trust Dow Jones Internet Index (ticker: FDN)

E-commerce can cover a broad array of merchants and service providers and this First Trust fund is a good way to cast a wide net over this subsector. Top holdings include payments processor PayPal Holdings (PYPL), retail giant Amazon.com (AMZN) and streaming video player Netflix (NFLX). The fund holds more than 40 companies, but the top three positions represent almost 25% of all assets – with AMZN at more than 10% all by itself. That may be fine by you if you like Amazon as a big part of your portfolio, but keep this in mind since FDN could move big based on a move in just one or two of these companies.

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Global e-commerce is surging.

The dot-com revolution that began two decades ago forever changed the U.S. economy by launching a host of internet technologies. There remains big future potential in many of these technologies even as they mature. Take e-commerce for example; according to industry group Digital Commerce, global e-commerce sales surged 18% in 2018 – topping a $3 trillion industry, and amounting to 15% of total retail spending worldwide. So if you missed investing in tech stocks during the dot-com craze 20 years ago, never fear – these seven tactical exchange-traded funds allow you to invest directly in online spending to capitalize on this continued trend.

First Trust Dow Jones Internet Index (ticker: FDN)

E-commerce can cover a broad array of merchants and service providers and this First Trust fund is a good way to cast a wide net over this subsector. Top holdings include payments processor PayPal Holdings (PYPL), retail giant Amazon.com (AMZN) and streaming video player Netflix (NFLX). The fund holds more than 40 companies, but the top three positions represent almost 25% of all assets – with AMZN at more than 10% all by itself. That may be fine by you if you like Amazon as a big part of your portfolio, but keep this in mind since FDN could move big based on a move in just one or two of these companies.

SPDR S&P Internet ETF (XWEB)

Similar in flavor but much more diversified in makeup is this SPDR fund that holds 45 internet companies but regularly rebalances to try and keep weightings to less than 3% for a single position. That means a helping of relatively unknown picks like authentication and login solutions provider Okta (OKTA) as well as the large caps like Amazon. This diversification will help investors avoid big moves thanks to one company having an off day. However, at the same time XWEB's reliance on some smaller and less established internet companies does come with its own unique flavor of risk.

Amplify Online Retail ETF (IBUY)

One of the oldest dedicated e-commerce ETFs, with a launch date of 2016, IBUY is also one of the largest by net assets with about $250 million under management. This ETF has a nice array of 40 dedicated online retailers, including photo order site Shutterfly (SFLY) and craft marketplace Etsy (ETSY). The fund is well-diversified and no single holding represents more than about 4% of the portfolio at present. If you're looking for the most popular way to play the e-commerce trend in an ETF, this is your best bet.

ProShares Online Retail ETF (ONLN)

The more focused ProShares ONLN fund has just 20 stocks in total, making it a less diversified way to play the space. However, with top holdings of Amazon and Alibaba Group Holding (BABA) that may be a good thing as these stocks continue to charge higher. Still, it's worth noting that the fund is very top heavy with those two tech giants representing roughly 40% of the entire portfolio at present.

ProShares Long Online/Short Stores ETF (CLIX)

CLIX is taking the e-commerce investment strategy one step further by going long on online players and short against traditional brick-and-mortar merchants. This one-two punch of betting on the future while betting against the past can supercharge returns and tap into a powerful investment trend. Just be aware the expense ratio is a bit more elevated than traditional index funds because of this sophisticated strategy, with CLIX charging 0.65% in annual fees. That adds up to about $65 a year on $10,000 invested.

Global X E-commerce ETF (EBIZ)

A smaller and more recent entrant, this Global X fund is not quite as liquid as some of the other funds on this list. However, the EBIZ ETF holds a healthy collection of 40 stocks with a global twist. The fund’s top positions include Argentina-based e-commerce giant Mercadolibre (MELI) and Canada-based e-commerce software provider Shopify (SHOP). This is an important difference from traditional e-commerce or consumer funds that have a domestic focus. In many ways, the e-commerce revolution in the U.S. has already happened – while the global opportunities are still wide open.

Emerging Markets Internet & Ecommerce ETF (EMQQ)

Of course, if you want to really go where the global opportunities are then you'll cut out developed markets as well as the U.S. and go right to the fast-growing e-commerce markets in Asia and South America. That's what EMQQ provides, with a very aggressive strategy that layers on screens for both sector and geography. Holdings are allocated with about 60% in China, 10% in Korea and a smattering of companies across South Africa, Russia, Brazil and other regions. It's a truly global fund – but one that comes with plenty of risk, since emerging market consumer spending trends can be quite volatile.

Smart ETFs to invest in e-commerce.

First Trust Dow Jones Internet Index (FDN)SPDR S&P Internet ETF (XWEB)Amplify Online Retail ETF (IBUY)ProShares Online Retail ETF (ONLN)ProShares Long Online/Short Stores ETF (CLIX)Global X E-commerce ETF (EBIZ)Emerging Markets Internet & Ecommerce ETF (EMQQ)1 of 10

Jeff Reeves, Contributor

A veteran journalist with extensive capital markets experience, Jeff Reeves began writing for ...  Read more

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