3 ETFs to Watch if Holiday Spending Was Better Than Expected

The record year in equities could have translated to good vibes for consumers who may have opened up their wallets more often than expected this past holiday season.

According to a CNBC report, BofA’s debit and credit card data shows “December sales increased 0.3% over the month earlier and 3.2% year-over-year. The economists expect to see a similar 0.3% gain in Census Bureau retail sales, when they are reported Thursday.”

If those numbers hold up, then it would mean a better-than-expected year that could translate to gains for retail ETFs.

“Assuming our forecast is correct, Census Bureau holiday sales, which are defined as retail ex-auto & gas for November and December combined, would reveal a 4.7% yoy gain. The consumer was happy to spend at the end of 2019, kicking off 2020 on a good note,” the economists wrote.

One notable trends to highlight is the persisting movement of shoppers from brick-and-mortar establishments to online retail sales.

“In our view, discretionary spending is largely done online which means investors should focus on online retailers to understand the propensity for fluctuations in spending,” the BofA economists noted.

Here are three ETFs to watch:

1. SPDR S&P Retail ETF (NYSEArca: XRT): seeks to provide investment results that correspond generally to the total return performance of an index derived from the retail segment of a U.S. total market composite index. In seeking to track the performance of the S&P Retail Select Industry Index (the “index”), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the retail segment of the S&P Total Market Index (“S&P TMI”).
2. ProShares Online Retail ETF (NYSEArca: ONLN): seeks investment results that track the performance of the ProShares Online Retail Index (the index). Under normal circumstances, the fund will invest at least 80% of its assets in the component securities of the index. The index is designed to measure the performance of publicly traded companies that principally sell online or through other non-store sales channels, such as through mobile or app purchases, rather than through “brick and mortar” store locations.
3. Amplify Online Retail ETF (NasdaqGM: IBUY): seeks investment results that generally correspond to the price and yield of the EQM Online Retail Index. The fund will invest at least 80% of its total assets in global equity securities that comprise the index, which will primarily include common stocks and/or depositary receipts, such as ADRs and GDRs. The index seeks to measure the performance of global equity securities of publicly traded companies with significant revenue from the online retail business. The index methodology is designed to result in a portfolio that has the potential for capital appreciation.

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