Caution Still Warranted With Retail ETFs

Making matters worse are the struggles of some big-name brick-and-mortar retailers, including Sears Holding (NASDAQ: SHLD), which some retail sector observers fear is on the brink of collapse. A similar sentiment has recently been applied to J.C. Penney (NYSE: JCP). Shares of J.C. Penney appear to be locked in a death spiral with the stock down almost 28% over the past week, bringing its year-to-date loss to over 53%.

“That’s not to say it’s all doom and gloom. The second quarter brings better weather, distance from delayed tax returns and in some cases more subdued underlying stock expectations,” reports Barron’s.

Investors have added $102.7 million in new assets to XRT this year while pulling almost $27 million from RTH. XRT is also one of the most heavily shorted ETFs.

Related: Interesting Activity in Retail ETF Ahead of Earnings

The trend away from traditional department stores and apparel retailers to online shopping destinations should benefit the Amplify Online Retail ETF (NasdaqGM: IBUY), which debuted last year. IBUY, which is comprised of global companies that generate at least 70% of revenue from online or virtual sales, has been one of the best-performing retail ETFs since its inception.

IBUY provides exposure to many familiar online names, such as WayFair Inc (NYSE: W), Etsy (NasdaqGS: ETSY), FTD Companies (NasdaqGS: FTD), Overstock Com Inc (NasdaqGS: OSTK) and Priceline (NasdaqGS: PCLN).

For more information on the consumer sector, visit our consumer discretionary category.