There is nothing like the holiday shopping season to renew investors’ interest in retail exchange traded funds. Even the SPDR S&P Retail ETF (NYSEArca: XRT), the largest retail ETF, which has been a laggard for much of 2017, is receiving renewed attention.
The retail sector has been under pressure on the rise of e-commerce outlets, like Amazon.com. Meanwhile, traditional brick-and-mortar stores are shutting down, with the threat of bankruptcy for smaller players, dragging on the broader retail segment.
“It’s not just holiday shoppers who have been on a spending spree this week. Shop ‘til you drop also seems to have been the mindset of investors, who have flocked into retail exchange-traded funds,” reports Bloomberg. “About $320 million has been poured into the SPDR S&P Retail ETF over the past two days, the most since Jan. 17, according to Bloomberg data.”
nvestors considering other retail exchange traded funds, may want to look at the VanEckVectors Retail ETF (NYSEARCA: RTH). An obvious advantage of RTH is its massive exposure to Amazon. Additionally, Wal-Mart (NYSE: WMT), one of the best-performing Dow stocks this year, is one of RTH’s largest non-Amazon holdings.
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XRT features exposure to the following retail industries: Apparel Retail, Automotive Retail, Computer & Electronic Retail, Department Stores, Drug Retail, Food Retailers, General Merchandise Stores, Hypermarkets & Super Centers, Internet & Direct Marketing Retail, and Specialty Stores.
Still, traditional retailers must contend with shoppers’ growing preference for online shopping. 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 is up nearly 40% year-to-date.
“Other retail-focused ETFs have also seen notable flow activity. The Amplify Online Retail ETF, known as IBUY, has received $39 million in November, its largest month of inflows since April 2016 inception,” according to Bloomberg.
For more information on the consumer sector, visit our consumer discretionary category.