4 Consumer ETFs for Renewed Confidence
February 22nd 2011 at 3:00pm by Tom Lydon
They’re down sharply today, but retail exchange traded funds (ETFs) could get a shot in the arm from the latest consumer confidence numbers.
Consumers are feeling the most confident about the U.S. economy than they have in three years, when the recession was at full bore.
It’s encouraging that American shopper feel that way, considering that oil prices are now back above $100, inflation is a pressing concern and the real estate market is still in need of some mojo.
It could also bode well for some consumer ETFs, a few of which are at highs themselves:
- First Trust Consumer Discretionary AlphaDEX (NYSEArca: FXD): This fund, which launched in May 2007, is at an all-time high. It’s also one of the top-performing consumer discretionary ETFs, up 14% in the last three months.
- SPDR S&P Retail (NYSEArca: XRT): XRT is a good way to take a cautious stance on consumer spending if you’re not buying the numbers, because of its allocation to retailers that stand to benefit when times are tight. Jo-Ann (NYSE: JAS), Sears (NYSE: SHLD), Netflix (NYSE: NFLX) and Priceline (NYSE: PCLN) are among the fund’s holdings.
- Rydex S&P Equal Weight Consumer Discretionary (NYSEArca: RCD): RCD is two plays in one. Its equal-weight strategy favors smaller companies, which do better in times of recovery, while it gives exposure to a mix of value retailers – Big Lots (NYSE: BIG) is the top holding – and discretionary companies.
- PowerShares Dynamic Retail (NYSEArca: PMR) is another good way to play consumers. It has exposure to both Dollar Tree (NYSE: DLTR) and Family Dollar (NYSE: FDO), along with rent-to-own places like Rent-A-Center (NYSE: RCII) and Aaron’s (NYSE: AAN).
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
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.