It appears that certain U.S. equity sectors are seeing some position trimming going into next month’s earnings season, as we recently highlighted such activity in Technology.
Today, similar action brings us to the U.S. Retail Equity sector, where the largest ETF in the category, XRT (SPDR S&P Retail, Expense Ratio 0.35%) has seen >$400 million flow out of the fund in recent sessions, bringing its YTD total to $-750 million in terms of net outflows.
All this while, XRT’s predominant trend at least since early February has been straight up in price, so clearly some sellers are picking spots to punt away existing long positions.
XRT is equal weighted and re-balanced periodically to keep all positions roughly in-line as security prices will undoubtedly move in relation to one another, tracking the S&P Retail Select Industry Index, and top holdings are currently: ZLC (1.50%), BKS (1.36%), SIG (1.27%), EXPE (1.25%), and ANF (1.24%).
This fund decidedly leans towards Mid and Small cap names, making up collectively more than 68% of the overall portfolio, and with many companies expected to report quarterly results in the next month or so, this could be pre-earnings season profit taking. XRT is miles ahead of the next largest competitor in the space in U.S. Retail Equity in terms of asset size currently, with PMR (PowerShares Dynamic Retail Portfolio, Expense Ratio 0.60%) holding about $26 milllion currently, and the next largest fund in the space RTH (Market Vectors Retail, Expense Ratio 0.35%) having about $25.5 million in AUM.
PMR’s underlying holdings are reasonably well balanced across large/mid/and small cap names, with top holdings shaking out as the following currently: WAG (6.01%), CVS (5.72%), KR (5.26%), TJX (5.12%), and WFM (5.00%). One can quickly note that XRT is currently “leaning” toward a few Retail Jewelers while PMR has considerable top end exposure to Retail Pharmacy/Drug Store Chains as well as grocers such as KR and WFM.
RTH on the other hand is the play for those whom want mega/large cap exposure to Retail names, as 93% of the portfolio resides in such names. Top holdings for instance are AMZN (8.10%), WMT (8.04%), HD (7.53%), WAG (5.81%), and CVS (5.67%), all names that will be in the spotlight in the near term as we approaching a pivotal earnings season.