The VanEck Vectors Retail ETF (NYSEArca: RTH) is off 3.4% year-to-date. While that performance is nothing to brag about, it is somewhat sturdy compared to other retail exchange traded funds, which have been hampered by slumping apparel and auto retailers, among other factors.
RTH covers the 25 largest U.S. companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Top components include Amazon (NasdaqGS: AMZN), Home Depot (NYSE: HD) and Wal-Mart (NYSE: WMT).
Related: America’s Less Dressed: 3 Factors Weighing On Retail ETFs.
It has been Amazon, and more recently Dow component Wal-Mart, that have been helping RTH be less bad than rival retail ETFs. RTH got a lift Thursday after Wal-Mart said it earned 98 cents a share in its most recently completed quarter. That easily beat the 88 cents a share analysts expected WMT to earn. Wal-Mart jumped 9.6% on heavy volume helping RTH to a gain on a day in which U.S. stocks faltered.
Still, other RTH components are holding the ETF back.
[related_stories]“Curiously, two notable companies that enjoyed better-than-expected earnings in recent days – Home Depot (HD) and TJX Cos. (TJX) – are much further down on the list. Home Depot is understandably at 24 because many of its products are too large and impractical to ship from online orders. Apparel and home goods seller TJX did not even make the cut,” reports Michael Kahn for Barron’s.
Barron’s notes that those two stocks recently delivered decent earnings but reacted poorly to the news. Rival retail ETFs struggling at the hands of sliding apparel sales include the SPDR S&P Retail ETF (NYSEArca: XRT) and the PowerShares Dynamic Retail Portfolio (NYSEArca: PMR). PMR follows a factor-based index, which weights components based on price momentum, earnings momentum, quality, management action and value.
Related: Amazon in Focus for Retail ETFs
“Retail is one of my four key market sectors, along with technology, home building and financials, that help gauge the health of the overall market. Each is now lagging the broad market to some degree to give a warning sign for the market and, by extension, to the economy. Retail in particular is lagging significantly as the chart of the SPDR S&P Retail ETF (XRT) shows,” adds Barron’s.
For more information on the retail sector, visit our retail category.
Market Vectors Retail ETF
