Yesterday we saw good-sized put activity in an ETF that has become a barometer for some in the U.S. Retail Equity space, XRT (SPDR S&P Retail Index, Expense Ratio 0.35%).
The June 79 puts traded in good size, and although these are well out of the money options, it is worth noting that the fund has seen nearly $500 million vacate via redemption activity year to date, leaving about $686 million in the ETF currently.
The fund tends to attract and see assets leave in “chunks” like this, for the lack of a better word, as it seems that shorter term (not necessarily day-traders, but investors/traders that have a time frame of weeks and months instead of years) are attracted to XRT’s rather high daily trading volume (2.9 million shares) as well as the optionality of the product.
We tend to see larger, directionally oriented trades in XRT options several times a year like the one we saw yesterday, and it is always worth paying attention to these as they come if nothing
else. Despite the year to date trend of assets flowing out of the fund, XRT remains a larger player in the broader Consumer Discretionary Equity space, where it is the fourth largest fund in assets under management.
In terms of being exclusively “Retail” oriented, it is the largest fund in that specific sub-category and has been around since June of 2006. XRT employs a “modified equal -weighted methodology”, and
thus has no notable “Large Cap” lean, where in fact more than 71% of the portfolio resides in Small and Mid-cap names, evidenced by top holdings like CONN, ABG, RCII, SUSS, and LAD, which are clearly not household Retail names.
Despite this fact, XRT still remains the favorite in terms of trading activity and regular asset flows and options activity that we have noted at least, favored over say another Retail specific ETF RTH (Market Vectors Retail, Expense Ratio 0.35%). RTH only has $27.6 million in assets under management, and to be fair it did only launch in late 2011, so it has had much less time in the market than XRT in terms of visibility.
RTH as a symbol may ring a bell to anyone whom formerly traded the “old RTH”, which was a now defunct, Merrill Lynch HOLDRs product. Today’s RTH from Market Vectors, is a much more efficient product and aside from having the same symbol, is not structured to be like or used like the ex-RTH was. RTH seems like a very effective “Earnings Season” or perhaps “Same Store Sales” type ETF, in terms of its top end asset exposure to names like WMT (11.22%), AMZN (8.93%), and HD (7.64%), and lesser exposure to names like LOW, TGT, and TJX which are also among the top ten names in the fund.
An even smaller Retail oriented fund is offered by PowerShares, and it is PMR (PowerShares Dynamic Retail Portfolio, Expense Ratio 0.60%) and this fund has approximately $25 million in AUM.
SPDR S&P Retail ETF
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.