In terms of consumer spending, it feels like 2009 all over again as shoppers clamp down on their wallets. But retail exchange traded funds (ETFs) have managed to cope with the ever-changing tides.
How’s this for a bad omen? The Deloitte Consumer Spending Index tanked its hardest in July, mostly due to the anemic housing market. The index attempts to track consumer cash flow as an indicator of future consumer spending.
Timothy R. Homan for Bloomberg reports that consumer spending, pending home sales and factory orders were all weaker than projected in June, indicating that any momentum consumers had is on the wane.
Now might be an ideal time to play retail via ETFs instead of picking single stocks. Although several value-focused retailers have posted strong earnings for the second quarter, retail is not always such a predictable sector. For example, you’d think that with real estate being so depressed, home-improvement retailers wouldn’t deliver good earnings. But Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) both managed to have solid quarters. [Pockets Of Strength For Retail ETFs.]
Don Dion for The Street favors SPDR S&P Retail (NYSEArca: XRT) as a consumer-spending play. It’s not top-heavy; the largest component, Priceline (NYSE: PLCN), is 2.7% of the fund. It also gives broad exposure to the sector, including luxury jewelry stores, department stores, small chains and value-focused retailers (such as Priceline). XRT is up 6.3% year-to-date. [Consumer ETFs Go Global.]