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New ProShares ETF is designed to benefit from decline of ‘bricks and mortar’ retailers


ETF provider ProShares has launched the ProShares Decline of the Retail Store ETF (EMTY), the first ETF specifically designed to benefit from the decline of traditional bricks and mortar retailers. The company has also launched the ProShares Long Online/Short Stores ETF (CLIX).

EMTY allows investors to benefit from the potential on-going erosion of value of retailers that rely principally on in-store sales. It provides consistent, daily short exposure (-1x) to the new Solactive-ProShares Bricks and Mortar Retail Store Index. The ETF is designed to deliver the inverse (opposite) of the daily performance of the index.
The Solactive-ProShares Bricks and Mortar Retail Store Index is the first comprehensive, public index to be composed exclusively of traditional retailers and is intended to become the standard for measuring their performance. It is equally weighted and currently has 56 constituent companies that include department stores, supermarkets and sellers of apparel, consumer electronics and home improvement items. Current constituents include retailers such as Barnes & Noble, The Gap, Macy’s, Kroger and Best Buy.
“Investors are witnessing signs of trouble in the malls and falling stock prices in the markets,” says Michael L Sapir, co-founder and CEO of ProShare Advisors, LLC, the advisor to ProShares. “For the first time, investors can turn these trends into a potential investment opportunity through an ETF.”
Over 30 major retailers have declared bankruptcy over the past three years, nearly two-thirds of those in 2017, including Toys “R” Us, RadioShack and Payless. The pressure is expected to continue with some analysts predicting that online sales growth will outpace bricks and mortar retailers 3-to-1 by 2020.
“Retail is being profoundly disrupted by shoppers moving online, oversaturated markets and changing consumer behaviours,” says Sapir. “While some retailers that rely on in-store sales may be able to adapt, we believe those will be a minority, and that the long-term trend is against these companies and in favour of EMTY’s strategy.”
CLIX meanwhile, is the first ETF to provide investors opportunities arising from both the potential growth of online companies and the decline of bricks and mortar retailers. It tracks the new ProShares Long Online/Short Stores Index which combines a 100 per cent long portfolio of on-line and non-traditional retailers with a 50 per cent short position in bricks and mortar retailers.
“With CLIX, investors not only receive the investment potential of online retailers like Amazon and Alibaba but also have the possibility of additional return from short exposure to traditional retailers,” says Sapir. “CLIX’s 50 per cent net exposure to the equity markets may result in less volatility than typical long-only equity strategies.”

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