Retail Data Drives Broad Market ETFs Higher

Zacks

The broad market benchmarks again reached new highs yesterday driven by robust retail sales data. Retail sales rose 1.1% in February, the largest increase in five months, suggesting that the economy is gaining momentum (read: Time to Buy Retail ETFs?).

This has also pushed the major ETFs tracking these benchmarks to new highs. Strengthening economic growth and easy monetary policy by the Fed further supports the rally in the equity market and for ETFs.

SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, added 0.14% in the last trading session after reaching a new high of $156.12. The fund holds 500 securities in its basket that are widely spread across different sectors and securities. All sectors such as information technology, financials, healthcare and consumer discretionary make up the diverse portfolio mix.

In terms of individual securities, Exxon Mobil (XOM), Apple (AAPL) and General Electric (GE) take the top three spots that make up a combined 7.6% of the assets, though none of the firms hold more than a 3% share. This diversification benefits cost investors 10 bps in annual fees, which is not a low cost choice in the space.

The product has garnered lot of investor interest of late as depicted by huge inflows of $5.5 million this month. This has helped to propel the fund’s asset base to nearly $133.8 billion. Trading in daily volumes of over 133 million shares, and the ETF is up 9.5% so far in the year (read: Three Most Popular ETFs of February).

The other fund - SPDR Dow Jones Industrial Average ETF (DIA) - gained marginally, but continued to keep its streak alive, rising for the ninth consecutive session. The fund tracks the performance of the Dow Jones Industrial Average and is comprised of 30 blue-chip companies coming from a wide variety of sectors.

International Business Machines (IBM), Chevron (CVX) and 3M Co. (MMM) are the top three holdings. IBM, which was a top performer yesterday, surged 0.7% and alone makes up for 11.18% of the fund’s assets. The product has a slight tilt towards industrials (21%), closely followed by information technology (16%) and consumer discretionary (12%) (see more ETFs in the Zacks ETF Center).

The fund charges 16 bps in fees per year, which is considered to be high, considering other funds in the large cap space. The ETF pulled in $509.2 million this month, pushing the total over $11.2 billion in its asset base. Additionally, the product has seen heavy average daily volume of more than 5.5 million shares and has gained 10.75% year-to-date.

So while both of these ETFs only added a bit after the retail sales data, the positive figures do suggest that the rally may be continuing. Strong data has been at the heart of 2013’s rally, and if this trend continues, it could help to keep SPY and DIA elevated heading into the second quarter.

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