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David England: Introducing NextGen Funds
Column | Eye on the Market

David England: Introducing NextGen Funds

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Last week, I featured the BJK-VanEck Vectors Gaming ETF along with its top companies. The performance returns were phenomenal. 

Today, I introduce you to a group categorized as Next Generation or NextGen for short. These are companies are game-changers, using new and upcoming technology to take us to the next level. Keep in mind, few had heard of Apple Computer in the late '70s or '80s. Investors once laughed at Jeff Bezos and his company that bled money. No one is laughing at them now. The companies in this NextGen space may be the next industry leaders in just a few short years.

As I introduce you to new ETFs and their top companies, place them in a watch list portfolio to monitor their action. In a few weeks, I will recap the funds and top companies in this series for new opportunities to consider for investing or trading.

The top Exchange Traded Funds in the NextGen group are as follows:

IBUY-Amplify Online Retail ETF seeks investment results that generally correspond (before fees and expenses) to the price and yield of the EQM Online Retail Index (the Index). The Index seeks to measure the performance of global equity securities of publicly traded companies with significant revenue from the online retail business.

ARKW- ARK Next Generation Internet ETF invests primarily in domestic and foreign equity securities of companies having their principal business activities as internet information providers.

ALPS-Clean Energy ETF tracks the performance of the CIBC Atlas Clean Energy Index, a diverse set of U.S. and Canadian companies involved in the clean energy sector including renewables and clean technology. The fund is non-diversified.

OGIG-O'Shares Global Internet Giants ETF, tracking the performance of the O'Shares Global Internet Giants Index, consisting of stocks exhibiting quality and growth characteristics in the internet sector.

KARS-KraneShares Electric Vehicles & Future Mobility Index ETF, seeking investment results that correspond to the Solactive Electric Vehicles and Future Mobility Index. 

ROBO-Global Robotics & Automation Index ETF tracks the performance of the ROBO Global Robotics and Automation Index, robotics-related, and/or automation-related companies. 

EOM Next Gen ETFs  Column.JPG

To see the performance of these top companies compared to the market (SPX), I designed a chart beginning on March 24, to real-time.

IBUY-Amplify Online Retail ETF took top honors with an impressive 133% return. ARKW- ARK Next Generation Internet ETF is up 118%. ALPS-Clean Energy ETF is up 104%, OGIG-O'Shares Global Internet Giants ETF up 89%, KARS-KraneShares Electric Vehicles & Future Mobility Index ETF up 65%, and ROBO-Global Robotics & Automation Index ETF up 60%. The market (SPX)-the green shaded area is up 44%.

Here are the key points: I usually track five funds but needed to include ROBO, the Global Robotics and Automation Index ETF because of its future potential. All funds in this exciting group outperformed the market. For investors and traders that are environmentally focused, ALPS will attract a lot of attention.

Next, I will identify the top companies in the top-performing IBUY-Amplify Online Retail ETF. The companies and a brief description are as follows:

OSTK-Overstock.com Inc. operates online shopping commercial site and was one of the first retail companies that allowed cryptocurrency as payment. It also sells products through www.overstock.com, www.o.com, and www.o.biz. It operates through the following business segments: Retail, tZERO, and MVI. More on tZERO and MVI in future columns.

CVNA-Carvana Co. is a holding company and an eCommerce platform, engaging in online buying and selling of automobiles.

PTON- Peloton Interactive Inc. operates an at-home fitness platform for live and on-demand indoor cycling classes. The company pioneered connected technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes. 

RVLU- Revolve Group Inc. engages in the design and retail of next-generation fashion for millennial consumers. 

GRUB-Grubhub Inc. operates as an online and mobile food-ordering company, which connects diners with local takeout restaurants. Its online and mobile ordering platforms allow diners and corporate businesses to order directly from takeout restaurants in the United States and London. 

ETSY-ETSY Inc. engages in the management of an online marketplace allowing sellers to manage and scale their business. It operates through the United States and International geographical segments.

EOM IBUY Top Companies  Column.JPG

To see the performance of these top companies compared to the market (SPX), I designed a chart beginning on March 24, to real-time.

OSTK-Overstock.com Inc. took top honors with an unheard of 1,449% return. CVNA-Carvana Co. is up 510%. PTON- Peloton Interactive Inc. up 308%, ETSY-ETSY Inc., up 248%. GRUB-Grubhub Inc. 131%, and the group laggard is RVLU- Revolve Group Inc. up 131%. The market (SPX)-the green shaded area is up 44%.

Here are the action points: During this timeframe, all six companies outperformed the market (SPX). The leader, Overstock.com is up over 1,400% with many others up as well. Why the astronomical returns? This timeframe represents state shutdowns due to COVID forcing many to shop online. Will these huge returns continue? That answer remains to be seen. 

The larger question: Will customers continue to shop online as more restrictions are lifted. Many will enjoy the online convenience and may be hesitant to change.

Playing stocks in this group is like gambling — it works until it doesn’t. I will be monitoring these companies, waiting for a pullback. When it happens, I will rely on my Simple Simon buy-and-sell system to help with my trade decisions.

Take the time to do your due diligence on each fund, which index they track and its holdings. Spend time to research the balance of the top companies to see if one may be the next company to run like OSTK, CVNA, and PTON.

In full disclosure, I do not hold any securities listed.

Plan your work, work your plan, and share your harvest!

David O. England is an investor/trader, financial analyst/educator/lecturer and Associate Professor Emeritus of Finance. This column is for educational purposes only and not intended as financial advice. Past performance does not dictate future returns. Questions? Send to thetraderseye@gmail.com.

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