Like it or not, the holiday shopping season is just about here. But don’t fear: forecasts call for good things for retail exchange traded funds (ETFs) in the next several weeks.

A retail industry trade group predicts that the holiday sales will jump 2.3% over last year, painting a brighter picture for the sector. If those numbers materialize, it would cap what’s been a much-improved year for retail ETFs.

Matthew D. McCall for Index Universe reports that not only that, but retail stocks have generally been able to outperform the markets this year. [Consumer Spending Powers Consumer Discretionary ETFs.]

Retail ETFs are a great way to reduce the risks of investing in this sector, especially at a time when retailers have seen mixed performance. Some, like Wal-Mart (NYSE: WMT) and Target (NYSE: TGT), have thrived in the recession, while many others have shut their doors or filed for bankruptcy – think Blockbuster, for starters.

Anita Wadhwani for Tennessean reports that the shopping season got a jump start, thanks to Halloween spending. Local retailers say that adding less expensive and discounted inventory for the duration of the short holiday season is a big part of the payoff. Retailers are holding fast to the idea that this is the start of a lucrative season. [Why Retail ETFs Are Holding Strong.]

Click here for more articles about the retail sector. Will it be the holiday season retailers are wishing for? Sign up for trading alerts to be notified of any trends spotted in these and other retail ETFs (which you can find in the ETF Analyzer):

  • Retail HOLDRs (NYSEArca: RTH)
  • SPDR S&P Retail (NYSEArca: XRT)
  • Vanguard Consumer Discretionary ETF (NYSEArca: VCR)

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. 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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