The SPDR S&P Retail ETF (XRT) was launched on 06/19/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Consumer Discretionary ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
XRT is managed by State Street Global Advisors, and this fund has amassed over $359.24 M, which makes it the largest ETF in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the S&P Retail Select Industry Index before fees and expenses.
The S&P Retail Select Industry Index represents the retail sub-industry portion of the S&P TMI. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Retail Index is a modified equal weight index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.35%, making it the least expensive product in the space.
It has a 12-month trailing dividend yield of 1.59%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For XRT, it has heaviest allocation in the Consumer Discretionary sector --about 86.20% of the portfolio --while Consumer Staples and Healthcare round out the top three.
Looking at individual holdings, Dsw Inc. Class A (DSW) accounts for about 1.44% of total assets, followed by Dollar General Corporation (DG) and Dick's Sporting Goods Inc. (DKS).
The top 10 holdings account for about 13.25% of total assets under management.
Performance and Risk
XRT has lost about -1.54% so far this year, and as of 04/25/2018, it's up approximately 4.44% in the last one year. In the past 52-week period, the fund has traded between $37.93 and $48.91.
The ETF has a beta of 1.06 and standard deviation of 19.12% for the trailing three-year period, making it a medium choice in the space. With about 87 holdings, it effectively diversifies company-specific risk.
SPDR S&P Retail ETF is an excellent option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
VanEck Vectors Retail ETF (RTH) tracks MVIS US Listed Retail 25 Index and the Amplify Online Retail ETF (IBUY) tracks EQM Online Retail Index. VanEck Vectors Retail ETF has $71.66 M in assets, Amplify Online Retail ETF has $283.12 M. RTH has an expense ratio of 0.35% and IBUY charges 0.65%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportVANECK-RETAIL (RTH): ETF Research ReportsSPDR-SP RET ETF (XRT): ETF Research ReportsAMPL-ONLN RETL (IBUY): ETF Research ReportsDSW Inc. (DSW): Free Stock Analysis ReportDollar General Corporation (DG): Free Stock Analysis ReportDICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research