“Part of it is the nature of the beast,” Magoon said. “These online retailers haven’t been around for 20, 50 years,”
For a company to be considered for IBUY, it must have a minimum market cap of $300 million and a daily traded value of $2 million shares traded.
Big brick-and-mortar companies are looking to smaller online retailers as acquisition targets, as seen in the recent news of Walmart seeking to buy online purveyor Jet.com, which equity analysts call Walmart’s attempt to be an “Amazon killer.” Even if Walmart’s purchase is successful, don’t expect the Arkansas-based company to be added to IBUY any time soon, Magoon said.
The EQM Online Retail Index that underpins the IBUY fund states that companies need to get 70 percent of their business from online, and that won’t be the case for Walmart, Magoon said.
Now that IBUY has a positive return for the year, Magoon hopes it will finally gain some traction. Plus he’s hoping the retail sector will pick up in the second half of the year, given back-to-school shopping and other year-end holiday sales.
“Summer is the weakest for retail, but … the consumer seems pretty healthy,” Magoon said.