Avoid Market Pitfalls
Equally as important as focusing on what to invest in is avoiding market pitfalls. Traditional brick-and-mortar retail, under stress from excess square footage and e-commerce taking market share, is one example.
 

  • “Overstoring” in the U.S. has resulted in large numbers of closures, and nearly 1 billion square feet of space will continue to be “rationalized” in the coming years. Meanwhile, growth of e-commerce sales in the U.S in 2017 is rising, estimated to be 8-12%, up to three times the growth rate of the overall industry, according to the National Retail Federation.​
  • Adding to brick and mortar’s woes are possible political actions and border taxes in the form of tariffs that may raise costs and squeeze margins.

  • Some investors – in fact, many in passive portfolios—may not even be aware that they have a material portion of their assets invested in this area of the market.

  • Investors should consider the long term implications of this trend by analyzing their portfolios for hidden risks of brick and mortar investments versus opportunities in e-commerce such as online merchants, digital advertising firms and parcel delivery companies.​

The views expressed are the views of Fred Alger Management, Inc. as of February 2017. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. ​

Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 / www.alger.com

800.305.8547 (Retail) / 212.806.8869 (Institutional)