This ETF Has Lost 13% Waiting for the ‘Retailpocalypse’

This ETF Has Lost 13% Waiting for the ‘Retailpocalypse’

  • EMTY fund is down around 13 percent since November inception
  • ‘Par for the course for thematic strategies,’ Balchunas says

The “retailpocalypse” came, but for an exchange-traded fund aimed at capitalizing on it, shopping Armageddon may have passed too quickly.

The ProShares Decline of the Retail Store ETF, known by its ticker EMTY, was started in November 2017 to bet against “brick and mortar” retailers that were poised to suffer from the dominance of internet shopping. At the time, the largest retail fund -- the SPDR S&P Retail ETF, ticker XRT -- was down more than 8.5 percent for the year compared with a 17 percent gain in the S&P 500 Index.

But fortunes have turned since then, as XRT has nearly tripled the return of the broader benchmark, while EMTY has declined around 13 percent.

“This is par for the course for thematic strategies,” said Bloomberg Intelligence analyst Eric Balchunas. “They tend to launch after a sweet backtest and then traditionally on average go down after their launch, because no one is going to list a product after a long, ugly backtest.”

Over the past year, opportunities to wager on the mall’s demise have captured the attention of everyone from hedge-fund types to computer-driven analysts. But on Monday, strategists at Evercore ISI sounded a counter-note, declaring the retailpocalypse “over” as results have improved and stores figure out how to manage inventory and market to customers in the digital age.

— With assistance by Janet Freund, and Tom Lagerman