Should I invest in this ETF to try and profit from Cyber Monday sales?

The 24-hour online shopping frenzy that is Cyber Monday has been growing in popularity over the last few years. It marks the end of a huge shopping weekend and has overtaken Black Friday in terms of digital sales. From. being largely a US phenomenon a few years ago, this has become a significant day for e-commerce around the world. As I think about how to invest to capitalise on this trend, I have come across a very interesting exchange traded fund.

The ETF

Given that Cyber Monday offers opportunities for both large and small e-tailers to increase their revenue, an obvious way to invest would be to buy the shares of those firms. However, L&G Ecommerce Logistics UCITS ETF (LSE:ECOG) offers an alternative and interesting way of investing in the still-growing e-commerce trend without investing in online retailers themselves. Rather, this ETF focuses on logistics service companies and technology firms that are enabling e-commerce.

An ETF (exchange traded fund) is a fund that tracks an index or sector and can be bought and sold like a share through most online brokers. This particular ETF aims to track the performance of the Solactive E-commerce Logistics Index.

All of the companies in that index either offer warehousing or delivery of online goods, or provide software to these logistic companies. At present, there are 43 publicly traded companies in the index from all over the world. The firms are predominantly from the US, but there are also holdings from Japan, Germany and the UK. The index doesn’t allow any company more than a 15% weighting in it. In fact, at the moment none of the companies represent more than 4% of the fund.

By holding a large number of companies covering many countries, it’s well diversified. It’s exactly this kind of diversity that I like about ETFs. They allow me to invest in a large number of companies by simply owning one share. 

The fund is relatively new and has only been going since 2018, but its performance has been impressive. Over 12 months it has returned over 20% and in the three years since inception, over 70%.

Should I invest?

I really like this fund. As Mark Twain said, “during the gold rush it’s a good time to be in the pick and shovel business”. This is how I think about the firms in this fund.

Online retailing across the globe is on the rise and is going to increase further. However, I’m not sure which online retailers will win in the long run. By investing in this fund, I’m not choosing retailers themselves. Regardless of which e-tailers succeed, they will all need the logistics and software going on behind the scenes. 

So will I invest? Not yet. Despite being very interested in investing, I’m not adding it to my portfolio for now. I don’t yet know enough about some of the companies in the index. I need to do more research on them before I invest.

Second, although its performance is impressive, it needs to be taken in context. There are individual stocks that have easily outperformed this. Take Apple, which has increased by more than 30% over a 52-week period.

I do like this exchange traded fund, but it isn’t for me right now. I’ll keep it on my watchlist and carry on looking for other opportunities.