With so many companies involved in e-commerce, investing in an e-commerce exchange-traded fund (ETF) may give you exposure to tech-savvy businesses in a variety of industries. After researching e-commerce ETFs, we’ve narrowed down the list of the ETFs that may be best for your portfolio. Presented in no particular order and based on each fund’s costs, historical performance, and diversification between different types of businesses, these are the best e-commerce ETFs for investors to consider. It has a reasonable expense ratio, too, at 0.65%—that’s $6.50 on an investment of $1,000. Its three-year return on investment as of Sept. 30, 2021, (the end of the third quarter) was 28.5%, too, which is the highest on our list. The ETF is well-diversified, with its top holdings, including well-known clothing, shipping, and food delivery companies like Etsy (2.9%), Doordash (2.9%), and Revolve (2.9%).

ProShares Online Retail ETF (ONLN)

3-year return (as of Sept. 30, 2021): 20.1%Expense ratio: 0.58%Assets under management (AUM as of Oct. 25, 2021): $875.6 millionInception date: July 13, 2018

Emerging Markets Internet + Ecommerce ETF (EMQQ)

3-year return (as of Sept. 30, 2021): 16.2%Expense ratio: 0.86%Assets under management (AUM as of Oct. 26, 2021): $1.29 billionInception date: Nov. 12, 2014

The Emerging Markets Internet + Ecommerce ETF (EMQQ) focuses on online businesses outside of the U.S. It is more expensive than some, charging 0.86% for its expense ratio (the highest on our list at $8.60 per $1,000 invested), and it has a lower three-year rate of return than other ETFs on this list as well. But if you’re looking to get exposure to other countries’ tech businesses, this ETF may be a good choice for your portfolio. Most of the fund’s assets are invested in Chinese businesses, but it also holds shares in companies from South Korea, India, Argentina, South Africa, Brazil, and Singapore, giving you strong international diversification.

Invesco NASDAQ Internet ETF (PNQI)

3-year return (as of Sept. 30, 2021): 20.9%Expense ratio: 0.60%Assets under management (AUM as of Oct. 26, 2021): $1.06 billionInception date: June 12, 2008

This is one of the oldest ETFs on our list, making it a little more well-established. It has a reasonable expense ratio of 0.60% ($6 on an investment of $1,000) and has returned 20.9% over the past three years, as of Sept. 30, 2021.

ETFMG Prime Mobile Payments ETF (IPAY)

3-year return (as of Sept. 30, 2021): 16.7%Expense ratio: 0.75%Assets under management (AUM as of Oct. 27, 2021): $1.22 billionInception date: July 15, 2015

The ETFMG Prime Mobile Payments ETF (IPAY) has the second-highest expense ratio on our list at 0.75% ($7.50 per $1,000), and its three-year returns as of Sept. 30, 2021, may be on the low end at 16.7%, but the exposure to large companies that facilitate online payments may be worth it in the long run.  Paying people is a major part of e-commerce and many tech companies have tried to make it easy for people to send and receive money to each other and to businesses. This ETF focuses on companies that facilitate online payments, including American Express (6.9%), Mastercard (6.5%), Visa (6.4%), Square (6.0%), and PayPal (5.3%). Every e-commerce business needs to be able to accept payments, so this is a unique way for you to get exposure to the industry and its major service providers.

Pros and Cons of Investing in E-Commerce ETFs

Pros Explained

Exposure to an increasingly important industry: E-commerce is a huge industry that has only grown more important as technology has advanced. Between 2012 and June 2021, the percentage of online sales as part of total retail spending grew from 7.3% to 18.6%. E-commerce ETFs help you tap into this growing industry.Diversification: If you want to invest in e-commerce, there are companies in all sorts of industries that utilize digital sales and payments, from clothing to food delivery and just general retail. Investing in an e-commerce ETF makes it easy to diversify your portfolio since many industries will likely be covered in the fund.

Cons Explained

E-commerce has grown more popular as more people gain access to the internet and technology has made online shopping easier. For example, when the pandemic hit in 2020, online shopping from home accelerated and sales grew by over 40% year over year in the second quarter of the year. Even by the second quarter of 2021, sales were still up, with consumers spending almost $1 of every $5 at online retailers.

The e-commerce ETFs on our list have all shown positive performance and returns on investment over the long term. All three-year rates of return were between 15% and 30% as of Sept. 30, 2021. If you were debating whether to invest in one of these ETFs, you might look to other types of funds before deciding if it was the right move for you. For example, the three-year return of the S&P 500 was 19.83%, and the Dow Jones Industrial Average returned 12.86%, as of Oct. 26, 2021.

Is an E-Commerce ETF Right for Me?

If you’re interested in investing in tech companies that sell products or process payments online, then an e-commerce ETF may be a good choice. This is especially true if you think that the trend of online shopping will continue to beat out shopping in-person at stores. As always, take the time to think about your investments and discuss them with a financial advisor to make sure you’re making the right decisions with your money.

The Bottom Line

E-commerce is a popular industry that saw huge growth between 2019 and 2021. Investing in an e-commerce ETF gives you exposure to the online sales industry, and it’s also one way to bet on societal trends, like food and clothing delivery, as well as online payments. The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.