The National Retail Federation (
) is forecasting holiday sales (November-December) to increase by
3.9 percent over last year to $602.1 billion.
The expectation is higher than last years 3.5 percent gain and
above the 10-year average of holiday sales growth of 3.3
The government shutdown and dismal jobs situation apparently
will not slow down the resilient American consumer. Whether times
are good or bad, the consumer likes to get out and spend money on
loved ones during the holiday season.
Attempting to choose the retailer that will outperform not
only in sales, but also in stock appreciation is a difficult
task. An alternative to that strategy is to consider a retail ETF
that will offer a basket of retail-focused stocks. There are
three ETFs that concentrate solely on retail stocks and each vary
based on holdings and performance.
SPDR S&P Retail ETF (NYSE:
The largest retail ETF with $953 million in assets is composed
of 99 stocks from a variety of retail sub-sectors. Apparel retail
stocks make up 28 percent of the portfolio, followed by specialty
stores, automotive retail, and Internet retail. The top holdings
are drug store Rite Aid (NYSE:
), The Men's Wearhouse (NYSE:
), and Office Depot (NYSE:
). Three retailers that are not necessarily considered hot spots
for the holiday shopping season.
The ETF charges an annual expense ratio of 0.35 percent and
pays a 0.46 percent dividend. Year-to-date the ETF is up 41
percent and it is currently trading at an all-time high.
PowerShares Dynamic Retail Portfolio ETF (NYSE:
This retail ETF has been able to slightly outperform XRT, with
a gain of 42 percent in 2013 and it is also trading at an
all-time high. The ETF has a more concentrated asset allocation
with only 30 stocks in the portfolio. The top 10 holdings account
for 47 percent of the entire ETF with the top stock making up 5.4
percent. The top three holdings are Walgreens (NYSE:
), Best Buy (NYSE:
),and Kroger (NYSE:
The electronics sector is always a hot sector during the
holiday season and BBY is the leader in the category. Wal-Mart
) is also a top holding for PMR that will typically be a holiday
shopping destination. The annual expense ratio is 0.63 percent
and the dividend yield is 0.84 percent.
Market Vectors Retail ETF (NYSE:
A basket of 26 retail stocks that is heavily concentrated in
the top ten holdings (59.4 percent) and on companies that have
exposure to the holiday shopper. The top holding, Amazon.com
) makes up 9 percent, followed by WMT at 8 percent. The ETF has
lagged its peers slightly this year with a gain of 39 percent,
but it is sitting at a new all-time high. The annual expense
ratio is 0.35 percent and the dividend yield is 0.35 percent.
When choosing the best-positioned retail ETF for the holiday
season the number one factor becomes the portfolio makeup. RTH
appears to be the best positioned with AMZN taking up 9 percent
of the portfolio. According to Shop.org, online holiday sales are
expected to increase by 13 to 15 percent this year. Having the
online retail giant as the number one holding is a bonus and WMT
number two makes RTH the most heavily reliant on holiday
This is a time where the laggard so far this year is the best
bet heading into the last six weeks of 2013.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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