As a pioneer in retail business, the United States provides
ample growth opportunities for all types of retail companies. The
retail industry covers everything in its scope, ranging from
internet catalog sales, auto dealers, convenience stores, vending
machines and clothing; thus dividing retailers into numerous
Retailers of all sizes, including individual direct marketers
or direct sellers, small- to medium-sized franchise unit owners,
and large "big-box" store operators compete in the U.S. (Read: B
uy These High Beta ETFs For a Santa Claus
From a growth perspective, the retail sector is among the
leading U.S. industries, and employs an enormous workforce.
Retailers nowadays are largely concentrating on buyers' needs and
luring consumers with innovative products, attractive discounts,
free shipping and the ease of shopping through smartphones and
Retail is no different from other U.S. industries and is highly
dependent on the economy to prosper. Such heightened dependence
on the economy and factors like job growth and interest rates
indicate that a speedy recovery of the economy is vital for the
health of the retail industry.
While the unemployment rate has decreased considerably over time,
consumers are now beginning to draw out their savings to spend,
anticipating some economic recovery.
So far this year, the broader markets have portrayed signs of
a better pace of recovery and have thus sparked hopes of a better
economic scenario going forward. The significant recovery in the
stock market is reflected through strong gains for the broader
market indices. (Read:
3 ETFs For This Holiday Season
The retail industry is highly competitive and encounters
significant challenges. Although the U.S. economy has started
witnessing a recovery, we believe that 2013 will not mark its
complete resurrection. Consumers are slowly regaining confidence
and cautiously increasing their spending. Consumer spending
accounts for over 2/3rd of the U.S. economic activity.
Playing the Sector through ETFs
ETFs present a low-cost and convenient way to get a diversified
exposure to this sector. Below we have highlighted a few ETFs
tracking the industry: (See all Retail ETFs
SPDR S&P Retail (
Launched in Jun 2006, SPDR S&P Retail (XRT) is an ETF that
seeks investment results corresponding to the S&P Retail
Select Industry Index. This fund consists of 98 stocks, with the
top holdings being Rite Aid Corporation (RAD), The Men's
Wearhouse Inc. (MW) and Vitamin Shoppe Inc. (VSI), representing
asset allocation of 1.39%, 1.32% and 1.31%, respectively, as of
Nov 22, 2013.
The fund's expense ratio is 0.35%, while dividend yield is 1.09%.
XRT has AUM of $967.8 million as of Nov 20, 2013.
Market Vectors Retail ETF (
Initiated in Dec 2011, Market Vectors Retail ETF (RTH) is an ETF
that tracks the performance of Market Vectors US Listed Retail 25
Index. The fund comprises of 25 stocks with the top holdings
being Amazon.com Inc. (AMZN), Wal-Mart Stores Inc. (WMT) and The
Home Depot Inc., representing asset allocation of 9.00%, 8.43%
and 7.68%, respectively, as of Nov 22, 2013.
The fund's expense ratio is 0.35% and dividend yield is 1.39%.
RTH has managed to attract $40.4 million in assets under
management till Nov 21, 2013.
PowerShares Dynamic Retail (
PowerShares Dynamic Retail (PMR), launched in Oct 2005, follows
Dynamic Retail Intellidex Index and is made up of 30 stocks that
are primarily engaged in operating general merchandise stores
such as department stores, discount stores, warehouse clubs and
superstores. The fund's top holdings are Walgreen Co. (WAG), The
Kroger Co. (KR) and CVS Caremark Corporation (CVS), reflecting
asset allocation of 5.42%, 5.08% and 5.00%, respectively, as of
Nov 22, 2013.
The fund's expense ratio is 0.63%, while dividend yield is 1.88%.
PMR has managed to attract $38.00 million in assets under
management as of Nov 21, 2013.
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PWRSH-DYN RETL (PMR): ETF Research Reports
MKT VEC-RETAIL (RTH): ETF Research Reports
SPDR-SP RET ETF (XRT): ETF Research Reports
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