5 Best E-Commerce ETFs of 2021

Look to e-commerce ETFs for exposure to the online shopping industry

Woman shopping online on a laptop in a cafe
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E-commerce, including online shopping and other online transactions, is a constantly growing part of the economy. Shopping online and processing payments through the internet is convenient for people around the world, so it’s easy to see why the e-commerce industry is so popular.

With so many companies involved in e-commerce, investing in an e-commerce exchange-traded fund (ETF) may give you exposure to tech-savvy businesses in a variety of industries.

After researching e-commerce ETFs, we’ve narrowed down the list of the ETFs that may be best for your portfolio. Presented in no particular order and based on each fund’s costs, historical performance, and diversification between different types of businesses, these are the best e-commerce ETFs for investors to consider.

ETF Name AUM (as of Oct. 25-27, 2021) Expense Ratio Inception Date
Amplify Online Retail ETF (IBUY) $906.7 million 0.65% April 20, 2016
ProShares Online Retail ETF (ONLN) $875.6 million 0.58% July 13, 2018
Emerging Markets Internet + Ecommerce ETF (EMQQ) $1.29 billion 0.86% Nov. 12, 2014
Invesco NASDAQ Internet ETF (PNQI) $1.06 billion 0.60% June 12, 2008
ETFMG Prime Mobile Payments ETF (IPAY) $1.22 billion 0.75% July 15, 2015

Amplify Online Retail ETF (IBUY)

  • 3-year return (as of Sept. 30, 2021): 28.5%
  • Expense ratio: 0.65%
  • Assets under management (AUM as of Oct. 26, 2021): $906.7 million
  • Inception date: April 20, 2016

If you want a pure play on e-commerce, the Amplify Online Retail ETF (IBUY) may be a solid choice for your portfolio. The ETF invests in businesses that earn more than 70% of their revenue through online sales.

It has a reasonable expense ratio, too, at 0.65%—that’s $6.50 on an investment of $1,000. Its three-year return on investment as of Sept. 30, 2021, (the end of the third quarter) was 28.5%, too, which is the highest on our list. The ETF is well-diversified, with its top holdings, including well-known clothing, shipping, and food delivery companies like Etsy (2.9%), Doordash (2.9%), and Revolve (2.9%).

ProShares Online Retail ETF (ONLN)

  • 3-year return (as of Sept. 30, 2021): 20.1%
  • Expense ratio: 0.58%
  • Assets under management (AUM as of Oct. 25, 2021): $875.6 million
  • Inception date: July 13, 2018

The ProShares Online Retail ETF (ONLN) is another ETF focused primarily on businesses that sell products online. Its expense ratio may be lower than the Amplify Online Retail ETF, but it also has a less diversified portfolio. It keeps a large portion of its assets in huge e-commerce businesses like Amazon (23.7%), Alibaba (13.5%), and eBay (4.9%), so it may not be as good a choice for those who want diversification. The fund has returned 20.1% over the past three years and has an expense ratio of 0.58% or $5.80 for $1,000 invested.

Emerging Markets Internet + Ecommerce ETF (EMQQ)

  • 3-year return (as of Sept. 30, 2021): 16.2%
  • Expense ratio: 0.86%
  • Assets under management (AUM as of Oct. 26, 2021): $1.29 billion
  • Inception date: Nov. 12, 2014

The Emerging Markets Internet + Ecommerce ETF (EMQQ) focuses on online businesses outside of the U.S. It is more expensive than some, charging 0.86% for its expense ratio (the highest on our list at $8.60 per $1,000 invested), and it has a lower three-year rate of return than other ETFs on this list as well.

But if you’re looking to get exposure to other countries’ tech businesses, this ETF may be a good choice for your portfolio. Most of the fund’s assets are invested in Chinese businesses, but it also holds shares in companies from South Korea, India, Argentina, South Africa, Brazil, and Singapore, giving you strong international diversification.

Invesco NASDAQ Internet ETF (PNQI)

  • 3-year return (as of Sept. 30, 2021): 20.9%
  • Expense ratio: 0.60%
  • Assets under management (AUM as of Oct. 26, 2021): $1.06 billion
  • Inception date: June 12, 2008

The Invesco NASDAQ Internet ETF (PNQI) is an option if you want more broad exposure to internet companies rather than buying into an ETF that focuses solely on businesses that sell goods to customers online. This includes service providers like web hosts and search engines, as well as retailers. Top holdings include Adobe (8.1%), Amazon (7.9%), and Alphabet (7.9%) to name a few.

This is one of the oldest ETFs on our list, making it a little more well-established. It has a reasonable expense ratio of 0.60% ($6 on an investment of $1,000) and has returned 20.9% over the past three years, as of Sept. 30, 2021.

ETFMG Prime Mobile Payments ETF (IPAY)

  • 3-year return (as of Sept. 30, 2021): 16.7%
  • Expense ratio: 0.75%
  • Assets under management (AUM as of Oct. 27, 2021): $1.22 billion
  • Inception date: July 15, 2015

The ETFMG Prime Mobile Payments ETF (IPAY) has the second-highest expense ratio on our list at 0.75% ($7.50 per $1,000), and its three-year returns as of Sept. 30, 2021, may be on the low end at 16.7%, but the exposure to large companies that facilitate online payments may be worth it in the long run. 

Paying people is a major part of e-commerce and many tech companies have tried to make it easy for people to send and receive money to each other and to businesses. This ETF focuses on companies that facilitate online payments, including American Express (6.9%), Mastercard (6.5%), Visa (6.4%), Square (6.0%), and PayPal (5.3%). Every e-commerce business needs to be able to accept payments, so this is a unique way for you to get exposure to the industry and its major service providers.

Pros and Cons of Investing in E-Commerce ETFs

Pros
  • Exposure to an increasingly important industry

  • Diversification


Cons
  • Industry is dominated by a few players

  • Many e-commerce companies focus on more than just e-commerce


Pros Explained

  • Exposure to an increasingly important industry: E-commerce is a huge industry that has only grown more important as technology has advanced. Between 2012 and June 2021, the percentage of online sales as part of total retail spending grew from 7.3% to 18.6%. E-commerce ETFs help you tap into this growing industry.
  • Diversification: If you want to invest in e-commerce, there are companies in all sorts of industries that utilize digital sales and payments, from clothing to food delivery and just general retail. Investing in an e-commerce ETF makes it easy to diversify your portfolio since many industries will likely be covered in the fund.

Cons Explained

  • Industry is dominated by a few players: You might fear that a few huge players, such as Amazon, Walmart, or eBay, dominate the industry and thus the holdings in e-commerce ETFs, making it difficult to find opportunities. That’s reasonable considering Amazon controlled 40% of the U.S. e-commerce industry as of February 2021. If you’re not a fan or already invest in Amazon in other ways, e-commerce ETFs may not be right for you.
  • Many e-commerce companies focus on more than just e-commerce: Investing solely in the e-commerce industry may be difficult as many of the biggest e-commerce businesses do more than just sell products. Looking at Amazon again, the company also offers cloud computing through AWS. So if it’s included in an e-commerce ETF, you’re not just investing in Amazon’s retail business.

Historical Performance Trends

E-commerce has grown more popular as more people gain access to the internet and technology has made online shopping easier. For example, when the pandemic hit in 2020, online shopping from home accelerated and sales grew by over 40% year over year in the second quarter of the year. Even by the second quarter of 2021, sales were still up, with consumers spending almost $1 of every $5 at online retailers.

The e-commerce ETFs on our list have all shown positive performance and returns on investment over the long term. All three-year rates of return were between 15% and 30% as of Sept. 30, 2021. If you were debating whether to invest in one of these ETFs, you might look to other types of funds before deciding if it was the right move for you. For example, the three-year return of the S&P 500 was 19.83%, and the Dow Jones Industrial Average returned 12.86%, as of Oct. 26, 2021.

Is an E-Commerce ETF Right for Me?

If you’re interested in investing in tech companies that sell products or process payments online, then an e-commerce ETF may be a good choice. This is especially true if you think that the trend of online shopping will continue to beat out shopping in-person at stores.

As always, take the time to think about your investments and discuss them with a financial advisor to make sure you’re making the right decisions with your money.

The Bottom Line

E-commerce is a popular industry that saw huge growth between 2019 and 2021. Investing in an e-commerce ETF gives you exposure to the online sales industry, and it’s also one way to bet on societal trends, like food and clothing delivery, as well as online payments.

Frequently Asked Questions (FAQs)

What are e-commerce ETFs?

E-commerce ETFs are exchange-traded funds that focus on investing in businesses that sell goods and services to consumers on the internet. This can include retailers like Amazon or Walmart, or apps that help you order takeout like Doordash.

How can I invest in e-commerce ETFs?

You can invest in e-commerce ETFs through a brokerage account. You may be able to find a broker that operates its own ETFs or use your brokerage account to buy ETFs from providers. This may be done online, via an app, or in person with a broker.

When should I buy e-commerce ETFs?

Timing the market can be difficult, even when buying diversified ETFs. If you think e-commerce is poised to become more popular, then you may want to buy shares sooner than later. However, always think about how your investments align with your financial goals and take the time to discuss your investments with a financial advisor.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.