The U.S. economy will strengthen from falling crude oil prices as consumers are left with more spending money to spread around, with airline, automobile and retail sector-related exchange traded funds to likely benefit the most.
“Low oil prices, which in turn have sent gas prices lower, are great news for the overall economy,” Anthony Grisanti, founder of GRZ Energy, said in a CNBC article. “There are many sectors that will benefit from cheap oil that include airlines, autos, retailers to name a few.”
ETF investors interested in gaining exposure to these sectors have a number of options available. For instance, the Market Vectors Retail ETF (NYSEArca: RTH) and SPDR S&P Retail ETF (NYSEArca: XRT) both cover the retail sector. XRT takes a broader approach with over 100 components and equally weights its holdings. RTH, on the other hand, focuses on the 25 largest retailers in the space. Year-to-date, RTH rose 13.8% and XRT gained 6.6%. [A Retail ETF for the Holiday Season]
The First Trust NASDAQ Global Auto Index Fund (NasdaqGM: CARZ) provides access to global automobile manufacturers. Top country weights include Japan 38.0%, U.S. 23.4%, Germany 20.4%, South Korea 6.5% and France 5.1%. Year-to-date, CARZ is down 1.1%. The sector ETF is testing its 200-day moving average after a strong month for auto sales in November.
While there are no longer any airline-specific ETFs available, investors can still gain exposure to the sub-sector through iShares Transportation Average ETF (NYSEArca: IYT) and SPDR S&P Transportation ETF (NYSEArca: XTN). Airlines make up 15.0% of IYT and 26.7% of XTN. Year-to-date, IYT gained 25.2% and XTN increased 31.4%. [U.S. Oil Boom Pushing Transportation ETF]
West Texas Intermediate crude oil futures are now trading at $67 per barrel while Brent crude oil futures are at $69.9 per barrel. Meanwhile, the national average for a gallon of regular gasoline is under $3 in 42 states, which translates to a $630 million in savings per day, compared to June’s prices. RBOB gasoline futures are at $1.8 per gallon.
“RBOB gasoline futures hit a five-year low this week; of course, that’s going to have an impact on everything from auto sales to consumer spending in other parts of the economy,” Grisanti added.
For more information on market sectors, visit our sector ETFs category.
Max Chen contributed to this article.