Holiday Rush Sends Retail ETFs on a Tear

December 23rd at 12:00pm by Tom Lydon

Since the holiday shopping season officially kicked off on Black Friday, retail exchange traded funds (ETFs) have built on the gains they’ve made for much of this year. But what’s left when the rush wears off?

Consumers are certainly feeling positive about the strides the economy has made in recent weeks as a gauge of U.S. consumer sentiment shows upbeat numbers. According to MarketWatch, the gauge climbed to 74.5 in late December, which is an improvement for the time being , yet lower than pre-recession levels.

Stores are taking retail strategies a step further and pulling our all stops in an effort to get customers to spend. Andria Cheng for MarketWatch reports that the industry’s busiest spending period is proving to be a lucrative one. [How Mind Games Could Boost Retail ETFs.]

Areas seeing increased growth include online sales, up 13.5% season to date. Apparel sales were up 9.8%. Jewelry sales rose 2.6% while luxury-sector sales, excluding jewelry, climbed 2.8%. [Shopping the Retail ETFs.]

Chloe Albanesius for PC Mag reports that free shipping has helped spur the increased online sales and the transportation sector. The Free Shipping Day helped produce a 61 % boost in online shopping from last year, and should continue to boost the sector for the remainder of the holiday season…and perhaps into 2011.

The strongest retail ETFs this holiday shopping period have reflected the broader uptrend in small-caps these days, too: PowerShares S&P SmallCap Consumer Staples (NYSEArca: XLPS), up 8.3%; PowerShares S&P SmallCap Consumer Discretionary (NYSEArca: XLYS), up 8.1%; Rydex S&P Equal Weight Consumer Discretionary (NYSEArca: RCD), up 6.1%.

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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