Speaker 1:
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Pete Asch:
It is the holiday season, which means across the country people are embarking on their yearly traditions, albeit many with COVID-related adjustments to ensure a happy and healthy new year. For my house, that means pulling out the decorations, making latkes. And of course, the daily delivery of holiday cheer, which is what I call the impromptu meeting of the UPS and FedEx drivers dropping off boxes on my front porch. The National Retail Federation expects Americans to spend about $700 on gifts between November and the end of the year. Most of that money will be spent the old fashioned way, but more than ever, it'll be done contactless over the internet. Online sales went from 5% to 12% of us retail between 2012 and 2019. For obvious reasons, this year supercharged the sector, leading to almost an equal size growth in just six months.
Pete Asch:
According to a recent tweet from Amplify ETFs, 2020 we'll see online sales grow 33% year over year, totalling nearly $200 billion. That wasn't the only helpful advice offered to me by the Twitter account as I scrolled through the feed. Another tweet gave me advice on what were the best day to get a deal for every item on my holiday shopping list. By the time you're listening to this episode, you've miss the best chance to get a new computer, that was November 28th. But if your list includes a new power drill, the secret is to wait until after Christmas, on December 26th. I just hope the recipient understands.
Pete Asch:
You may be wondering why an ETF issue is tweeting out holiday shopping secrets, unless you know about the Amplify Online Retail ETF, NYSE Arca ticker IBUY. ETF is the first and with over 1.2 billion in assets under management, the largest offering from Amplify. The product which provides exposure to online retail has seen unprecedented growth over the course of 2020. Our conversation with Christian Magoon, founder and CEO of amplify ETFs on investing in the economy of today and tomorrow, pioneering thematic ETFs, and when is the right time to buy that perfect gift, is coming up after this break.
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Pete Asch:
Our guest today, Christian Magoon is founder and CEO of Amplify ETFs. Christian has launched over 70 ETFs in the United States to date. Previously he served as president of Claymore Securities, where he launched their ETF business in 2006, and is also founder of Magoon Capital LLC. Christian, welcome Inside the ICE House.
Christian Magoon:
Hey, thanks, Pete. Good to be with you, and happy holidays.
Pete Asch:
Thank you. So most, I think would be reticent to mention how much of their first workday after Thanksgiving they spent checking out Cyber Monday. But as I mentioned in the intro, it's sort of core to one of your marque ETFs. Did you grab any deals yesterday while monitoring how the sector was doing?
Christian Magoon:
Yeah, I actually did a lot of shopping and this year has been interesting, especially online. Many of the deals started earlier than Black Friday or Cyber Monday. Thanksgiving actually was a huge uptick in online spending, up almost 40% year over year. And it's because many of the brick and mortar stores were closed, so people were hopping on their phones on Thanksgiving night. It's more socially acceptable than ever to do some of those holiday shopping errands from their couch. So yeah, I purchased a few gifts for my family and I'm guessing I'll have a lot of cardboard boxes outside my door pretty soon.
Pete Asch:
So this year we're seeing for the first time a lot of small and medium businesses are now actually competing with the big box stores. Have you seen an impact from that yet? Has companies like Shopify that underpin these really seen a growth over 2020?
Christian Magoon:
Yeah, they absolutely have. I mean, it's become material now to have a robust online presence. And companies like Shopify, which I think is NYSE listed, they do a great job of getting small and medium-sized businesses up to speed. We have an ETF, the largest of online retail stocks, and there's several different segments in there. One type of online retail stock is these online platform stocks. So these companies that provide a platform for third parties, now Amazon does some of that eBay, Shopify, there's a variety of companies like that. And they've been really kind of an essential business as there's been so many physical restrictions for brick and mortar stores, especially the mom and pops out there that haven't been really dubbed to be essential shopping destinations. So yeah, across the board, whether you're in just direct to retail online or you're providing a platform, or even some of the different services related to online, there's been a huge boom in that, because we've seen probably about two years worth of market share growth here in this kind of COVID economy for online retail.
Pete Asch:
Is it possible if you have to figure out how much of that is just simply people can't go to the store and how much of that is actually changing consumer behavior?
Christian Magoon:
The trend had already been fairly robust for the growth of online retail. The U.S. Census Bureau started measuring online retail sales in the U.S. all the way back in 1999. And back then it was less than 1% of all sales, and coming into this year, it was right around that 12% mark. Now we've already seen that, so that growth is right around 20% compounded average growth rate going back 1999. So very healthy, but still, at 12%, that's a very small percentage of overall U.S. retail sales. The latest number from the U.S. Census Bureau about two months ago was that 16% market share is now where online is, so a big move. And we expect that could get as high as 20% by year end. Some believe that U.S. online retail sales will eventually be 50% of all retail sales here within the next five years. So very healthy growth rate.
Christian Magoon:
COVID really accelerated a trend that already was occurring. And as you know, humans are kind of a habit-based creature. So you start to buy online for the first time or you do more of your online shopping and it really becomes part of your habit. Usually about 60 days is what it takes to create a habit. And we've certainly been in this COVID economy for more than 60 days. So we think that, once the reopening fully occurs, let's hopefully say in 2021, there will be some people who kind of go back to, going to brick and mortar stores, but online has some, or online retail has some really big benefits. I mean, right now one of the benefits that people like we believe is just the convenience, right? You don't have to go to the store, you don't have to take the extra risk, but historically the big benefit that shoppers perceive from online retail is pricing, competitive pricing.
Christian Magoon:
And that means being able to kind of quickly assess whether this is a fair price to basically generally get competitive pricing or price matching online. So we think that it's kind of a key appeal, and certainly during the COVID economy and post recovery, we think people are going to be kind of very sensible about their money. So we think that price competitiveness that online offers should be continuing to bring people into the online fold. The other thing I would just say is, selection is a big deal for online retail. How many times have we gone in and they don't have the toy or the color or the size in a physical store? And a lot of times they point you online anyway. So having increased selection is a real big benefit for online retail.
Christian Magoon:
So those are kind of the three, we think all weather types of appeal for online retailers, and that's why we see them being really the bright spot of overall retail sales. This holiday season they're estimating, spending is supposed to be up three to 5% across all retail. Online, however, is supposed to be up closer to 30%. So it is the bright spot, the area that's continued to do well, not only in the COVID economy, but even over the last four years or so.
Pete Asch:
When you think about online, one of the things, Black Friday's great for the retail side, but really if you think about the company it's when they get into the black, it's when they make a profit for the first time.
Christian Magoon:
Yes.
Pete Asch:
Do you see in online retail, are they as tied to that cyclical nature of holidays, or are they sort of more steady throughout the year?
Christian Magoon:
Yeah, so they tend to have a big buildup of sales around those holiday shopping. So it used to be that kind of back-to-school was a key motivator. Now that's kind of become a little bit fuzzy, and really going into the holiday shopping season, kind of those, what they call the core five holidays shopping events, that changed about two years ago when Amazon introduced Prime Day. And Prime Day really gave a huge shot in the arm to retailers, both online and frankly brick and mortar that have an online presence in the summer. And that pulled some of the traditional back-to-school shopping into that summer months. In addition, there started to become more people who were doing their holiday shopping in the middle of the summer because they had increased selection and knew that they could have that item already taken care of. This year was a little bit weird because of COVID, Amazon really had to push Prime Day due to supply issues into the fall.
Christian Magoon:
And that probably took a little bit out of the steam here of holiday shopping. But no question about it, holiday shopping is huge, not only for brick and mortar, but for online, and that's the one area that online does disproportionately well. So last year when e-commerce was around 11% of total U.S. sales, the holiday shopping period, it was actually more like 20%. So online gets a disproportionate amount of share during the holiday. In this holiday season we think that market share could be as high as 50% for online retail, especially due to the increasing restrictions that are starting to kind of happen around the country. Black Friday this year in 2020 was the second biggest shopping holiday ever. And yesterday on Cyber Monday was the largest shopping holiday ever in the history of the U.S. So really good numbers. It's a little bit of a tongue in cheek though, because online each year is setting new records, and it's just because of the trend towards digitization in shopping.
Pete Asch:
And we're also recording this, you mentioned Cyber Monday being yesterday, on another online holiday that didn't exist back years ago, which is Giving Tuesday, which also in 2020, particularly with the impact of COVID probably had more importance to nonprofits and colleges. In preparing for this, I learned a couple interesting things. One, including that both you and your wife have a scholarship at Wheaton College, is that where you guys met?
Christian Magoon:
That is our kind of our history. And the thought was to provide a scholarship for underprivileged kids to be able to go to that school. It's a liberal arts school, and there is some larger costs associated with that, which can be prohibitive, depending on your financial condition or even a little bit based off the kind of the cost of a liberal arts degree. And yeah, we wanted to do that as a way to give back. And it's interesting when you look at kind of online, it used to be that people would write a lot of checks on a Giving Tuesday, and now a lot of these payments are increasingly going digital. And that is another area that kind of, at least our ETF benefits from having some of those payment providers in there, because it's just a changing world, either due to convenience or due to safety issues, cash is starting just to go out the window.
Christian Magoon:
And that's kind of a interesting trend that tends to benefit these online businesses. We're a lot more comfortable now making a donation, paying for a large item via our electronic to advice. Kind of the one of the big things kind of which I think we'll probably see on Giving Tuesday as well, but in terms of online shopping this year, believe it or not, about 42% of online shopping should be done from a phone this year, which is unbelievable. It used to be that larger items and the majority really were done via a computer or a laptop. But people are becoming more and more comfortable being able to transact in even larger amounts via their mobile device. And that's just a neat trend that I think hopefully will be beneficial on Giving Tuesday here to many of these charities who might not even be able to have their doors open right now to accept a gift or a donation in kind physically.
Christian Magoon:
So it'll be interesting to see if we see some of that similar stats go through into that kind of the charitable side. Certainly there's a great need for it right now in terms of what COVID has done specifically for many service and hospitality workers. And we've been a big advocate for seeing some more stimulus, and especially stimulus targeted to those industries. They're definitely been hard hit. And in our ETF we do have actually some exposure to some of the online travel stocks. So the Expedias, the Trip Advisors of the world, because that industry has been changed by online retail. And quite frankly, it's hindered our performance and our ETF this year. Now with that being said, our ETF is up over a 100% this year. So it's been a big winner, but it also, that's exposure that's hindered it actually gives us potentially some wind in our sales for a potential reopening later this year.
Christian Magoon:
So things start to reopen, TripAdvisor, Expedia. I think there's going to be a massive rush to travel. Many of us have been pent up for now quite a bit, and that should be kind of an interesting pivot that many people don't necessarily think all the time about kind of how that industry works and how friendly and changed it is, versus years ago where you were doing paper tickets and paper booking, or even doing all on the phone. Now it's almost all digital. And that's a kind of an interesting area going into 2021, for at least our online retail ETF. Have about 7% of the portfolio exposed to that area.
Pete Asch:
And I mean, people are not only pent up. I mean, there's more cash pent up than ever before as well, people want to spend on vacations and other things. I was thinking about the history of ETFs, and one thing I learned, and the reason why I brought up Wheaton is I did not know until I prepared for this podcast that Wheaton Illinois is not only home to Amplify ETFs, but it's actually the epicenter of the ETF world. Our past podcast guest Bruce Bond is from there. Several companies in the ETF space were founded by even Wheaton College alumni. So liberal arts school with an interesting amount of financial history and includes Jim Bowen who founded First Trust, which, who I believe that that's where you got your start?
Christian Magoon:
Yeah, so believe it or not. I worked with Bruce Bond at First Trust in the mid-90s, and previous to all the different things that we've been involved in since then. So yeah, there's a kind of a unique financial history, especially as it pertains to call it financial products, whether it's exchange traded funds, unit investment trust, closed end funds, a variety of kind of connections in that sphere. And I'm not sure exactly why that is, but I think it goes back to Robert Van Kampen, who was a kind of financial executive that had a background with the school. And there's a variety of companies that kind of came out of that. And of course, I think Van Kampen now today is part of Invesco. So yeah, it's interesting. Wheaton has a variety of different legacies. Probably the least of it maybe recognized would be some of that legacy in the financial side.
Christian Magoon:
And certainly if you look at Jim Bowen and Bruce Bond, both have been unbelievably successful and people that I think have left a big imprint in the industry, they're both 10, 15, maybe years older than I am. They've been in the industry longer than I have, but I look at them and I say, "Boy, it's pretty exciting to see what they've done." And I hope to have even half the impact that they've been able to have in kind of the financial services area in terms of doing some of these different types of products and the innovation they've brought to the space. So yeah, it's fun being in some ways mentioned in that same company.
Pete Asch:
When you showed up at Wheaton, was that your plan to go into financial services? Or, how did you come across your first ETF? I mean, if I do my math right, you showed up around when SPY was being launched.
Christian Magoon:
Yeah. So, I have a Peter Lynch book that my dad gave me when I was probably about seven years old and I was kind of interested in finance from a young age. My father was a financial advisor and actually both sets of my grandfathers were financial advisors. So it was talked about a lot in our family and I was kind of interested in it. So I was always reading about it, went to Wheaton, I really kind of maintained that interest and was fortunate enough to get an internship when I was there at First Trust Portfolios, it was known as a different company at that time called Nike Securities. And kind of really learned the business there in a different way, more in a practical way, and ended up getting my first job out of college there. And I think I kind of view myself student teacher when it comes to our industry.
Christian Magoon:
I really like learning about a lot of the innovative things that are going on. I like learning about the different investment opportunities. And then I like being able to turn around and kind of teach that if you will. And I think that's why when you kind of look at what I've been involved with from a business standpoint, in terms of product launches, et cetera, most of what I've done has been kind of first to market products, unique strategies that we're trying to provide access to that expand the toolbox for financial advisors and investors. So whether it be like the first online retail ETF, and now there's a slew of them out there, or the first solar energy ETF or first China technology ETF, all these types of kind of first to market products kind of came, I think, as a result of me being a student, either with people doing research or being inquisitive on certain areas or people approaching me saying, "Hey, do you know about this opportunity?"
Christian Magoon:
I think the package product format, something I was always attracted to. Just because I think you could harness expertise and then deliver it to investors and let them be the decision maker on what their allocation or risk tolerance was. Growing up with a bunch of financial advisors around me, I wasn't that interested in dealing with hundreds of clients and determining their risk tolerance and taking the full phone calls when markets are up or down. I really wanted to instead create the tools that people can then use, and especially with financial advisors. So it's been a fun journey and I've enjoyed it. And Amplify has been a project here, we're almost five years old as a company. And as you said, IBUY was our first fund, and is our most successful thus far, and it's been fun.
Christian Magoon:
I mean, when you look across our product line, we have everything from online retail to a legal cannabis ETF, to a blockchain-focused ETF, to our BlackSwan ETF that did well during the COVID crisis. And a variety of different kind of unique niches that, I think have added value to investors. And for me, that's personally satisfying.
Pete Asch:
I had to update my script this morning, because I was going to say, you've launched nine ETFs since 2016 under Amplify, but as of this morning, I believe it is now 10.
Christian Magoon:
That's right. So just this morning we launched the Amplify Pure Junior Gold Miners ETF on the New York Stock Exchange. The ticker is J-G-L-D, J Gold is kind of what we say about it. And we really saw an opportunity there, because there is a fairly large gold mining ETF that has been so successful, I think it's like six million in assets, that it's had to change its focus or its index several different times to buy larger and larger stocks and include other companies that aren't necessarily gold miners. So we saw an opportunity to bring our pure product kind of going back to the roots of this original product where we're able to provide kind of pure access to junior gold mining stocks. And, if you're familiar with kind of gold and gold miners, you know that when gold appreciates gold miners tend to appreciate historically two to four times more because it's more of a leverage place, definitely more aggressive and more volatile than gold.
Christian Magoon:
So we wanted to provide kind of a back to the basics pure play on junior gold miners, and try not to have any silver stocks in our ETF, which some of the larger ETFs do, and try to focus on the smaller companies. You know, some of the legacy products have as much as 30% of their portfolio in large cap stocks, even though they're called a junior gold miner ETF. So I think we have had in inception 88% of our exposure to kind of these small to midcap companies. So this is a little bit off script in terms of it not being "the first," but in some ways it really is the, and the only now way to play this space from a pure investment standpoint.
Christian Magoon:
And we look at gold and think with all the federal stimulus dollars that have happened and are going to continue to happen over the next probably six months, we think kind of these finite asset areas like gold, like silver and potentially even like Bitcoin can really appreciate. So now we'll have kind of an avenue for investors to access gold via these junior gold stocks with J Gold. And then also a way to access Bitcoin and blockchain companies with our B-L-O-K our BLOK ETF, which actually owns some Bitcoin in it via GVTC position. I just saw the other day that about 20% of all dollars that are outside, that are circulating right now were printed in 2020, to give you an idea of how much stimulus is out there. So excited about that area as well.
Pete Asch:
So what I'm taking is, Amplify ETF is cutting edge. It's pure play, and we'll get into the two pure play online retail ones the second half. But is there anything else that's the overall arching philosophy that defines an Amplify ETF?
Christian Magoon:
Yeah, I mean, I think of the word disruption. I think what we're really trying to do is capitalize on a lot of the disruption that's happening in the world today. We tend to play on disruptive trends. I don't want to give all our secrets away and how we find kind of opportunities, but disruptive trends can be consumer trends, could be demographics. It could be policy changes in geopolitics. I think that's another area that I think we've been able to capitalize on and look to do that in the future as well.
Pete Asch:
Well, after this short disruption, Christian Magoon, founder and CEO of Amplify ETFs, and I will discuss how Amplify Online Retail ETF, that's NYSE Arca ticker IBUY and Amplify International Online ETF, NYSE Arca ticker XBUY, help investors gain exposure in the growing online retail sector. We'll be back right after this break.
Dan Primack:
Hi, I'm Axios business editor, Dan Primack host of Axios Recap, a new weekday podcast featuring interviews that get straight to the point. My guests are business leaders, politicians, and reporters driving the day's biggest stories. We're joined now by Jalen Rose.
Jalen Rose:
Thanks a lot.
Dan Primack:
Bill Adman.
Bill:
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Dan Primack:
Senator Amy Klobuchar.
Amy Klobuchar:
Thank you, Dan.
Dan Primack:
Steven Soderbergh.
Steven Soderbergh:
Thanks for having me.
Dan Primack:
Andrew Yang.
Andrew Yang:
Thank you, it's a pleasure.
Dan Primack:
You can find Axios Recap on Apple or Spotify, or wherever you like to listen to podcasts.
Pete Asch:
Welcome back. Before the break, Christian Magoon, founder and CEO of Amplify ETFs, and I were discussing his career and the philosophy behind Amplify ETFs. So we were talking a bit about pure play. Your company has two pure play online retail ETFs one, as I mentioned, the Amplify Online Retail ETF, and that's IBUY, and then the Amplify International Online ETF, XBUY that provide exposure to businesses with 70 and 90% of their revenue coming from online sales respectively. We discussed online retail, the tele conversation, but what are the kinds of companies that go into these indexes?
Christian Magoon:
You get companies that really fall into three categories in the cases of our ETF. So you get platform companies, which we mentioned early on. These are companies that operate e-commerce platforms that help others kind of sell on their platforms. So, the quick thought on that would be like a Shopify, an eBay. You could say Amazon is, although Amazon kind of qualifies in two different areas. The next area is really these traditional retailers that are essentially selling direct online. And there's some interesting companies that come up. So Peloton would be one, Etsy, Stitch Fix, Chewy, Overstock. These are lands in, believe it or not, PetMeds, Chegg on the educational side, Shutterstock. Variety of companies there that are basically ... Don't really operate much physically and essentially do majority of their revenue online.
Christian Magoon:
And then the third area, which is really the smallest area of IBUY's allocation, again, around seven or 8% is online travel. So you get, the Trip Advisors, Expedia, you could also add like an Uber, a Lyft to that area. There's also one or two companies overseas that do a lot of the travel, for example, out of China, kind of the Expedia of China, if you will. So you get a kind of a variety or mix of companies that qualify. I think the secret though to our ETF besides the Purity is our waiting scheme. And weighting scheme simply means, what do we weight each stock? And you look at something like the S&P500, a well known index. That's a market cap weighted index, so that our company is weighted based off their overall market cap. And you can see some pretty heavy concentrations in companies like that.
Christian Magoon:
The index that we track is actually equal weighted. And that means that each company in that 75% U.S. sleeve is equally weighted. And then every company on the 25% international sleeve is equally weighted. So in other words, Amazon has the same weight as Etsy or Peloton, for example. And a lot of people are surprised when they see that, because most people are used to market cap waiting. They'll look at our top fund holdings, for example, and they're oftentimes Amazon isn't even in our top 10 because of other companies just performing better. And indeed, as I'm looking at this right now, Amazon isn't in our top 10. And in fact, earlier this year Amazon was only the 22nd best performing online retail stock. So many of these smaller companies can have some outsize appreciation.
Christian Magoon:
If you think about it, it kind of makes sense. Number one, they tend to be more pure play focused on online retail. With Amazon you have, and some of these larger companies, including like an Alibaba on the international side, they have multiple businesses they've expanded over time, and they're involved in a variety of different things. Like for example, Amazon and AWS. If Amazon comes out with earnings and has a bad AWS cloud computing number, that can really impact the stock. Even though they might have a record online retail number, AWS is really kind of their fastest growing business. Versus something like an Etsy, a group like Etsy or Peloton or Chewy, a 100% of their focus is online, and they will be the most sensitive to the overall growth of online here in the U.S. and around the world. So we really think being equal weighted is important and has led to kind of the outperformance we've had.
Christian Magoon:
If you can believe this, Pete, if you go back to April 20th 2016, which is when IBUY launched. So April of 2016 through November 30th, kind of the end of the month in November in QQQ or the NASDAQ 100, has had substantial performance, 181% of return going back to April of 2020. The S&P's only done 88% during that timeframe, IBUY has done 318% going back to April 2016.
Christian Magoon:
So not quite double what QQQ has done, almost four times what the S&P 500 has done. This has really been a sweet spot, not just for the retail sector, but for investors overall. And we think we're still only in the beginning. I mean, with market share only around 16% for online retail and some suggesting it can go to closer to 50% in the coming three to five years, we think there's a lot of opportunity here. And thus, we think being pure play, being equally weighted makes a lot of sense. And you know, who knows, we'll see what happens, but this COVID kind of acceleration, we may not go back to kind of the old days where people go into stores as much going forward, because they've experienced some of the benefits here of shopping online.
Pete Asch:
Well, so if people don't go back to the stores though, I was thinking about this, these larger retail companies, you mentioned target about 10% of its online. When those now begin to transition more to 50%, is that a case where these pure play online retail companies will be edged out or does just sort of the rising tide of the online economy float all boats?
Christian Magoon:
Yeah, it's a good question. So probably what's going to happen really is what we call like omnichannel retail. And it basically, it's a seamless experience where you are more likely to buy online, but you have the ability to go in store or pick up in store or get delivered to store or get delivered to home, or get delivered to a locker, kind of this seamless integration. And no question, brick and mortar is not going away, but it's probably likely to consolidate amongst kind of the better players. And that would be more forward looking, those that embrace online that do see this omnichannel experience. So think of Walmart, they introduced Walmart plus this year as kind of a step forward to kind of compete against Amazon prime. Think of Target, I think is well positioned.
Christian Magoon:
So likely what we're probably going to see is, this year will be probably a record amount of store closures and bankruptcies, that will probably flow a lot into these bigger brands like Walmart and Target, but we'll also see probably some of these online retailers, like an Amazon, maybe even Alibaba start to scoop up some of these failed brick and mortar operations to turn them into not just a store, but also a delivery center, potentially ability to have lockers, maybe even a shipping area, an ability to deliver locally via drones even. Just kind of a little bit crazy, almost like a Jetsons type future, but we're going to see more of a mesh there.
Christian Magoon:
So the one thing about, I think these smaller online retail brands, they're kind of in a great position because they are essentially in between call it the large online champions that really have global ambitions, Amazon, Alibaba, MercadoLibre, would be great examples. They're between them and they're between these brick and mortar behemoths who are really seeing, "Hey, all the growth is happening online, we got to get better there," when that's Walmart Target, et cetera. And I think a lot of these small online retailers are poised for some existential M&A activity. And I think because of that, they're going to command premium valuations, how big of a move would it be if Walmart who typically is kind of known as a big box store says, "You know what, what we don't have is a lot of personalized gifts. And we don't have kind of some of the unique things that people come to stores to find, we're going to buy Etsy and we're going to create mini Etsy shops within Walmart to create some of these unique gifts that have more of a artisanal feel, to create more of an experience in the Walmart store so it doesn't feel so sterile."
Christian Magoon:
You can see that happening. Likewise, you can see Amazon saying, "Hey, we're a platform, we host all these individual merchants or whatever, we want Etsy, because that's an area that we think is going to be more important as customers increasingly want customization and they want to give gifts that have maybe a story behind that." So you see all of these companies that kind of fit between those two bookends as really having kind of bright future. And you know what, if they are able to stay independent, it's likely they're staying independent because they're doing quite well and kind of own that niche. I think of like a Peloton, for example, or a Chegg on the educational side.
Christian Magoon:
So it's going to be exciting to see what happens over the next five years. Because I think there's going to be a big transformation. And I think the after effects of COVID are also going to be quite interesting because again, less cash, more digital payments. We're seeing 5G rollout, which is very friendly for online retail. It's just quite amazing to see, we're trying to think forward as to what that could look like. And we see just a lot of benefits for companies that are embracing kind of the digitization of consumer shopping and behavior.
Pete Asch:
Similar to that, you mentioned earlier how a lot of the online retails over the phone now, and I was wondering, are you seeing any sort of leading indicators in XBUY, which is more internationally focused where many of the developing countries and international companies are skipping sort of the desktop phase of technology? Are you able to see anything in that particular ETF that helps you guess or predict where IBUY might be headed as the U.S. follows that direction of more phone-driven economy?
Christian Magoon:
Yeah, Pete, I mean, I like that question and like your thinking, because we definitely are seeing leapfrogging happening in parts of Africa, Southeast Asia. Believe it or not, some of these countries that I think some Americans kind of feel are maybe behind where the U.S. might be are actually ahead of the U.S. when it comes to some of these consumer trends. Market share in China and Japan and parts of developed Europe for online retail is already over 20%. And we're seeing embracing of new types of delivery, like drone delivery in areas like China that hasn't been happening here in the U.S. We're seeing people have their first phone via smartphone in parts of Africa and Southeast Asia, where in the U.S. there's still flip phones running around with a large percentage of the population.
Christian Magoon:
So definitely international is quite exciting, xFi is really what I would call one of our hidden gem ETFs. It's fairly new. And this year, so far it's the 30th best performing ETF out of over 2,000 ETFs in the U.S. But it doesn't have the billion dollar of assets that IBUY, it's just kind of getting, it grew, it's like less than two years old here, but its performance has been great. And we really think international might actually have more opportunity than kind of a domestic focus, because the demographics are younger. As you said, they're embracing new technology quicker. Already market share is larger in some of those countries for online. And it's growing at a faster rate. I think the U.S. is, when you look at like a country table is about 10th in terms of online retail growth year over year, looking at the last full year number of 2019, meaning there's nine other countries in various regions that are growing quite a bit faster than the U.S.
Christian Magoon:
The other thing that's kind of interesting just from a tactical standpoint is, while there's been so much federal stimulus here in the U.S. and we've seen markets rebound, that really hasn't been the case outside the U.S. There's kind of a muted recovery. And part of it is kind of how COVID affected many of those areas, China probably be the exception, because it kind of had it early and then got over it a lot more quickly. But certainly Europe and parts of Africa, even India are in a lot more difficult stages and haven't really seen the breakout, if you will, like we've seen in the U.S. for the equity market.
Christian Magoon:
So in some ways there might actually be more value and more kind of recovery upside international over the next 12 to 18 months than there would be in a more domestic focused area. With that being said, it's hard to ignore domestic online retailers, because it's such a great market when you're doing majority of your sales here in the U.S., that the U.S. consumer's in a good spot and there's likely to be a lot more stimulus. You're talking about hundreds of millions of stimulus overseas in various countries. Here in the U.S. you're generally talking about trillions of dollars of stimulus. And that's really a positive thing for consumer behavior.
Pete Asch:
You had mentioned the Amplify Transformational Data Sharing ETF, which you referred to by its really excellent name BLOK. I'm so impressed you guys got that ticker, considering how great it is. What are you seeing in there? I mean, is that being also lifted up during this period, and what is the relationship between, I notice that for example, PayPal is a big constituent of both IBUY and BLOK. Are you seeing any connection between those two?
Christian Magoon:
PayPal is kind of, I don't want to say kicked off a good part of the Bitcoin rally this year, but maybe came in kind of in the second phase of the Bitcoin rally and kind of announced that its platform is going to be able to kind of process cryptocurrency payments to Bitcoin specifically, which is a massive, massive user base in global. And we heard earlier in the year Square was going to do that as well. So, these companies that are embracing cryptocurrency as a form of currency and payment is definitely very positive. And when we launched our BLOK ETF, we originally filed with the name of it, having blockchain in it. And when you look at what blockchain technology is, blockchain technology is kind of the technology that powers crypto currency. Cryptocurrency is built on blockchain technology, sort of like internet technology.
Christian Magoon:
One of the applications of internet technology was websites or another application of internet technology was email. So most people discovered maybe email first and then realized, "Oh, this is part of the internet." Or they discovered a website first and, "Okay, I understand the internet." So the same has happened with blockchain technology, kind of the most popular, widely known application of blockchain technology is Bitcoin and cryptocurrencies. But that's flowing increasingly into kind of a new awareness, which is some of the ways to use blockchain for to keep transaction records to make data sharing more efficient, to create trusted data sharing, whether that's private blockchains or public blockchains. Just simply a lot of ledger accounting trust-based work that's done inefficiently today that blockchain has a real chance to transform and almost how information sharing used to happen pre-internet and the opportunity the internet made to really kind of really grow exponentially the ability to share information.
Christian Magoon:
That's what we think blockchain is going to be able to do for trust and transactions and record keeping. And we're definitely seeing more and more companies work on projects for everything from food safety to tracking shipping containers, to even tracking PPE equipment around the world. BLOK has a variety of different types of companies in there, from companies that create mining equipment for Bitcoin, to companies that operate cryptocurrency exchanges, to companies that do banking and investing in kind of the blockchain cryptocurrency space. And we also have different technology companies that are actively investing in blockchain applications, as well as financial companies that are doing it.
Christian Magoon:
And it's really not designed to be a Bitcoin ETF. It's really kind of designed to invest in companies that are related to blockchain, which does include some crypto, but we think it's a unique thematic way to invest in this space from an equity standpoint. There's not many ways to do that currently without maybe opening a digital wallet. There is no Bitcoin ETF, at some point there might be. So we think this is kind of a compelling way to have exposure to blockchain technology in general. And we feel like it's one of the disruptive themes we want to be a part of and offer access to for investors.
Pete Asch:
So as we wrap up, not to change the mood from all the positive all time highs we've been discussing, but you know, the market goes up, the market goes down. You mentioned a couple times the BlackSwan ETF, what is a black swan market event, and how does NYSE Arca ticker SWAN fit into that?
Christian Magoon:
Yes, so black swan events generally are declines in the market of 15 or 20%. And they're usually based off of risk or an event that investors really haven't foreseen or didn't expect. So there is some argument whether or not COVID is a black swan event, certainly with the S&P down over 30% at the low, it qualifies for a pretty massive market disrupting event. And to the downside, I think the question is, did investors kind of, should they have started to expect it once news came out from China, I think in early January? So, I look at it and say, simply from a market impact standpoint, this was a black swan event. And about two years ago we launched an ETF, ticker SWAN, Amplify BlackSwan Growth & Treasury Core ETF, a lot of words there.
Christian Magoon:
Based off a strategy that really is designed to hedge against significant market disruptions, like black swan events, but at the same time allow you to participate in the upside of the S&P500. And almost a little bit like a balanced fund does, but this is definitely different then a balanced fund. And this year SWAN, at the COVID low, when the S&P was off a little over 30%, was off, SWAN was off a little over 5%. So it really kind of proved its medal. And then in 2019, when the S&P had a great year, was up to 31%, SWAN returned 22%. So the thought on this is to not take these massive losses or try to avoid these massive losses during black swan type events, but then also during the kind of constant upward moving of the market over time, not just sit there and kind of whittle away, thus being able to participate in the upside of the S&P.
Christian Magoon:
So this we think is a real important core strategy for investors who can't stomach or can't afford to take a black swan type loss. Yeah, the S&P was down 30% for a little bit, and it didn't matter to you if you didn't feel any pressure and sell at those lows. But I think we all know we're human, and unfortunately many people do kind of sell low and buy high. And during that kind of stress event and all the headlines that were happening, it didn't seem too crazy to sell when the S&P was down 30%. And many people who are nearing retirement or are retired, that really probably hurt them quite a bit if they got out of the market. Likewise, if you're constantly waiting for a black swan to happen and have your money in cash, and aren't able to participate in the U.S. equity market or equity type returns, that doesn't really, you have to have a massive amount of money saved, because you're not getting much in cash nowadays to really keep up with inflation or cost of living.
Christian Magoon:
So we think you do still need some equity exposure. So swan is kind of that in between core type holding, I think for investors that again allows them kind of some of that hedge ability against these sudden shocks to the market, but also that nice ability to participate in the upside. And unlike some ETFs that might have a cap on how high you can go up in a year or a cap on how low you can go, there is no caps. So there's really no timing that you have to worry about or artificial upside or downside limits. It's just a really, just a standard ETF that can be added to a core and we think is very complimentary. And yeah, that's our black swan ETF nearing 750 million in AUM, assets under management over the last two years and something that's handily actually outperformed the S&P over the last two years.
Christian Magoon:
And if you look back at the last two years, we've had some pretty big up periods in the market and some decent sized drawdowns. So we're pleased to have that out in the market. And it was a nice addition to many of our other products that can have some, a lot of volatility associated with them because they tend to be heavily leaning into growth and disruption. So black swan is kind of a nice offset to that in our product line, and we think a nice addition to investors' core portfolios.
Pete Asch:
So, and you mentioned all the other ones, we unfortunately don't have time to go through every single one. So where can our listeners find out more about Amplify ETFs and all the different strategies your products offer them?
Christian Magoon:
So you can visit our website, it's amplifyetfs.com, and you'll find all of our information on our funds. There's videos, explainers of our funds. There's white papers, lots of data, performance, historical kind of track record. We'd love to have you visit our site, and you'll probably run into an ETF or two that you're interested in that you didn't even know we had at the time. So hopefully you enjoy browsing kind of this unique collection of products.
Pete Asch:
Thanks so much, Christian for joining us Inside the ICE House.
Christian Magoon:
Thanks, Pete. I really appreciate it.
Pete Asch:
That's our conversation for this week. Our guest was Christian Magoon, founder, and CEO of Amplify ETFs. If you like what you heard, please rate us on iTunes so other folks know where to find us. Got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us, @ICEHousePodcast. Our show was pretty by Ken Abel with production assistance from Steve Romanchik and Ian Wolff. I'm Pete Asch, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE, nor its affiliates make any representations or warranties, express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitution offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of mutual clarity.
