ETF Spotlight: Retail Sector and Hurricane Sandy

October 29th at 2:27pm by Tom Lydon

ETF Spotlight on Market Vectors Retail ETF (NYSEArca: RTH), part of an ongoing series.

Hurricane Sandy is devastating the Northeast. There is no “pure play” ETF for home-improvement companies but RTH’s top holding include Wal-Mart (NYSE: WMT) 14.5%, Home Depot (NYSE: HD) 9.9%, Amazon (NasdaqGS: AMZN) 9.5%, CVS Caremark (NYSE: CVS) 6.5% and Lowe’s (NYSE: LOW) 5.1%.

Assets: $16.5 million.

Objective: The Market Vectors Retail ETF tries to reflect the performance of the Market Vectors US Listed Retail 25 Index, which holds the 25 largest U.S.-listed, publicly traded retail companies.

What You Should Know:

  • Van Eck Global sponsors the fund.
  • RTH has a 0.35% expense ratio.
  • The fund has 26 holdings and the top ten make up 68% of the overall portfolio.
  • Sector allocations include 53.2%, consumer staples 39.0% and health care 7.9%.
  • The ETF is down 0.9% over the past month, up 4.5% over the last three months and up 19.1% year-to-date.
  • RTH is 5.0% above its 200-day exponential moving average.
  • “This ETF could be a good fit for investors looking to bulk up their exposure to the consumer,” according to Morningstar analyst Robert Goldsborough.
  • “It also could make sense for investors looking for a portfolio of very high-quality retailers, given that more than 71% of the assets in this ETF have economic moats, which Morningstar’s equity analysts define as sustainable competitive advantages,” Goldsborough added.

The Latest News:

  • “Mall-based stores will probably take a big hit as consumers focused on discount retailers (like Wal-Mart and Target) and home centers (including Lowe’s and Home Depot), basically steering shoppers clear of the malls,”  Krissy Klinger, a senior international business meteorologist at Weather Trends International, said in a MarketWatch report.
  • Klinger believes that home-improvement retailers like Home Depot and Lowe’s may experience a net positive impact from Hurricane Sandy as consumers stock up on emergency supplies before the storm and revisit the centers to fix damages.
  • While wholesale retailers like Wal-Mart, Target (NYSE: TGT), which is 5.0% of RTH, and Costco (NYSE: COST), which is 4.8% of RTH, benefited before the storm, Sandy could cause “an overall negative” impact.
  • “The overall impact is going to be a negative for November retail sales with store closings and consumers hunkering down at home during the storm,” Klinger added.

Market Vectors Retail ETF

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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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