August 31, 2020

The US Census Bureau recently released their e-commerce report for the 2nd quarter of 2020, the first quarter that felt the impact of the pandemic in its entirety. The report showed a dramatic increase in both total e-commerce sales as well as penetration. Though the second quarter total retail sales declined 3.9% from the first quarter, E-commerce sales increased 31.8%1.


Acceleration of a long-term trend: E-Commerce.

 

E-COMMERCE PERCENTAGE GROWTH
E-COMMERCE AS A PERCENT OF TOTAL DOMESTIC RETAIL SALES

Source: https://www.census.gov/retail/ecommerce/historic_releases.html

It is tempting to chalk this up to a temporary impact of the pandemic, but there are signs that this pandemic is accelerating an existing long-term trend and furthering opportunities for e-commerce growth. One glaring example: e-commerce food and beverage sales increased over 100% from the first quarter, and over 220% over the second quarter of last year2. However, it might not just be structural spending that changes, but seasonal changes as well. With students in some states already back in school and others preparing to return to school, families are expecting to spend a combined record breaking $33.9 Billion3 to get their children ready, with a new record of 37% of that spending occurring online4. As such, new habits – in previously underpenetrated categories – may be hard to break.

Source:
1https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
2https://www.census.gov/retail/index.html#ecommerce
3https://nrf.com/insights/holiday-and-seasonal-trends/back-school
4https://www.forbes.com/sites/blakemorgan/2020/07/20/back-to-school-season-brings-anxiety-and-impacts-spending/#39eb4abe3d49l

How investors can participate in retail disruption

For investors looking to take advantage of the long-term changes in retail disruption, ProShares offers a suite of retail disruption ETFs.

CLIX

Lets investors potentially benefit from both the potential growth of online companies and the decline of bricks-and-mortar retailers through a long/short construction.

ONLN

Tracks retailers that principally sell online or through other non-store channels

EMTY

Is a dedicated short fund designed to benefit from the decline of traditional bricks-and-mortar retailers

ProShares Retail Disruption ETFs provide investors with multiple strategies to take advantage of the investment potential of the new retail reality.


Any forward-looking statements herein are based on expectations of ProShare Advisors LLC at this time. ProShare Advisors LLC undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investing is currently subject to additional risks and uncertainties related to COVID-19, including economic, market and business conditions; changes in laws or regulations or other actions made by governmental authorities or regulatory bodies; and world economic and political developments.

ProShares EMTY seeks a return that is -1x the return of an index (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, EMTY's returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. Investors should monitor their holdings consistent with their strategies, as frequently as daily. For more on correlation, leverage and other risks, please read the prospectus.

Investing involves risk, including the possible loss of principal. These ProShares ETFs are non-diversified and entail certain risks, which may include risks associated with the use of derivatives (such as swap agreements, futures contracts and similar instruments), imperfect benchmark correlation, leverage and market price variance, all of which can increase volatility and decrease performance. EMTY seeks short exposure and should lose money when its index rises. CLIX’s short positions are not intended to hedge the portfolio in market downturns, but rather to allow stocks with unfavorable outlooks to contribute to performance. Short positions lose value as security prices increase. Investments in the consumer discretionary and retailing industries are subject to risks such as changes in domestic and international economies, interest rates, competition and consumer confidence; disposable household income; consumer tastes and preferences; intense competition; changing demographics; marketing and public perception; and dependence on third-party suppliers and distribution systems. Investments in smaller companies typically exhibit higher volatility. Smaller company stocks also may trade at greater spreads or lower trading volumes, and may be less liquid than stocks of larger companies. ONLN and CLIX invest in international investments, which may involve risks from: geographic concentration, differences in valuation and valuation times, unfavorable fluctuations in currency, differences in generally accepted accounting principles, and from economic or political instability. In emerging markets, many risks are heightened, and lower trading volumes may occur. Please see their summary and full prospectuses for a more complete description of risks. There is no guarantee any ProShares ETF will achieve its investment objective.

"Solactive AG," a registered trademark of Solactive AG, and the Solactive-ProShares Bricks and Mortar Retail Store Index have been licensed for use by ProShare Advisors LLC. Solactive AG serves as index calculation agent for the ProShares Long Online/Short Stores Index, ProShares Online Retail Index and Solactive-ProShares Bricks and Mortar Retail Store Index, and performs routine daily calculations and maintenance (e.g., reconstitution, rebalancing, and corporate actions). Solactive AG uses its best efforts to ensure that these indexes are calculated correctly. Solactive AG has no obligation to point out errors in the indexes to third parties, including but not limited to investors and/or financial intermediaries. Neither the ProShares Decline of the Retail Store ETF ("EMTY") nor the ProShares Long Online/Short Stores ETF (CLIX) are sponsored, endorsed, sold, or promoted by Solactive AG and they make no representation regarding the legality or suitability of the funds, or the advisability of investing in the funds. SOLACTIVE AG AND ITS AFFILIATES MAKE NO WARRANTIES, EXPRESS OR IMPLIED, AND BEAR NO LIABILITY WITH RESPECT TO THE INDEXES, PROSHARES, OR THE FUNDS.

Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing.

ProShares are distributed by SEI Investments Distribution Co., which is not affiliated with the funds' advisor or sponsor.

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