OPINION: A $217,000 gain in ETF will result in over $15,000 in fees. Here’s how to minimize those pesky costs.
Exchange traded funds are one of the best inventions for investors since the stock market itself. But they have one little problem.Popular sector ETFs like the iShares Expanded Tech Sector ETF IGM, +0.42%, the Invesco S&P 500 Equal Weight Tech RYT, +0.63% or the KraneShares CSI China Internet ETF KWEB, -2.09% charge anywhere from 0.4% to 0.7%.
To keep things simple, it’s better to build ETFs that target promising sectors with far fewer stocks. The key is to choose the right sector. You want one that benefits from a long-term secular trend. My choice? Internet shopping. I think it makes sense to begin buying now, and add on any weakness. After all, the sector already seems discounted. It recently traded at an enterprise value of 4.1 times forward sales, compared to 5.4 times last year, and a five-year average of 4.3.
Amazon.com Given its huge presence in cloud services with AWS, Amazon.com AMZN, +1.21% is no online shopping pure play. But it is so good at this, it now has 41% of U.S. ecommerce, says Bank of America. So it’s a must-own in your online shopping ETF. Increasing product reach and even faster shipping times should boost growth next year, says Bank of America analyst Justin Post.
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