It took the birth of a son on Monday of this week and a good Seattle-strong coffee this morning for me to realize that it’s not summertime anymore.
We are in the month of October. And like clockwork, Retailers are starting to get active as we approach the never ending fun of Black Friday through the December holiday shopping season.
XRT (SPDR S&P Retail, Expense Ratio 0.35%) has basically become the ETF barometer of the Retail Equity space as well as the recipient of substantial options flows activity as managers establish hedges or outright speculate at times on the typically volatile Retailers. [Why Retail ETFs Could Continue to Outperform]
XRT is hands down the giant in the space in terms of assets under management, with $1.03 billion raised since its 2006 inception. The fund itself follows an equal weighted strategy by re-balancing regularly in order to trim back exposure to stocks that have risen and buy more shares of those stocks that have fallen in value in order to keep everything roughly in-line. Top holdings at the moment in XRT are “new economy” names like Groupon Inc. (GRPN, 1.17%), Shutterfly Inc. (SFLY, 1.15%), and GameStop (GME, 1.14%).
Other funds that should be more active during the upcoming quarter as investors will look closely to the retailers to see if individual names are delivering on their expectations, as well as in order to gauge the health of overall consumer holiday season spending.
RTH (Market Vectors Retail, Expense Ratio 0.35%) is considerably smaller than XRT with $42.6 million in assets under management and has a large cap/value tilt to it, with top end exposure to names like WMT (10.42%), HD (9.46%), AMZN (7.94%), CVS (5.83%), and WAG (4.97%).
Clearly, it has a much different look and feel than XRT, as does another ETF in this space PMR (PowerShares Dynamic Retail Portfolio, Expense Ratio 0.60%) which follows the proprietary Dynamic Retail Intellidex Index methodology in selecting stocks for inclusion in the portfolio.
The fund remains somewhat small with $31.8 million under management, and top holdings currently look like the following: GPS (5.13%), KR (5.11%), COST (5.03%), WMT (4.96%), and M (4.95%).
Finally, RETL (Direxion Daily Retail Bull 3XShares, Expense Ratio 0.95%) will likely appeal to those aggressively looking to trade the sector from the bull side (it tracks the Russell 1000 Retail Index on a three times daily leveraged basis.
SPDR S&P Retail ETF
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- Expense Ratio