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Amazon Has Made This Retail ETF's Year

ETF Professor

Investors will have to wait a few weeks for the facts and figures about the 2015 holiday shopping season, but heading into Black Friday last month, expectations were tepid at best.

Those tepid expectations partially explain why 2015 has been a rough year for two of the three dedicated retail exchange traded funds. Year-to-date, the SPDR S&P Retail ETF (NYSE: XRT) and the PowerShares Dynamic Retail Portfolio (NYSE: PMR) are down 8.3 percent and 4.1 percent, respectively. The same gloomy fate has not befallen the Market Vectors Retail ETF (NYSE: RTH).

The $153.9 million RTH is up more than 8 percent and that performance is largely attributable to the epic run turned in by Amazon.com, Inc. (NASDAQ: AMZN). RTH is the Amazon ETF. RTH's weight to the soaring stock is 14.6 percent as of December 23, . That is nearly 470 basis points more than the First Trust Dow Jones Internet Index Fund (NYSE: FDN) allocates to the e-commerce giant.

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"Retailers are doing their best to price match, but can't keep up with Amazon's Prime offering. Prime customers are incentivized to use their service to get great deals, free 2-day shipping, streaming videos and even online cloud storage. Amazon's Prime Day sale held in July topped expectations and drove record revenues during a normally slow period. The company raked in 34.4M orders, an 18% increase from Black Friday 2014, and a 266% increase in worldwide orders," Benzinga reported Wednesday.

To be fair, RTH's bullishness relative to its retail ETF rivals has not been all about Amazon. An almost 5 percent weight to Costco Wholesale Corporation (NASDAQ: COST), the largest among retail ETFs, helps during a year in which shares of Costco are up 19.1 percent.

Up 29.4 percent year-to-date, Home Depot Inc. (NYSE: HD) is also bolstering RTH's fortunes. Home Depot is one just nine members of the Dow Jones Industrial Average with a double-digit gain this year. RTH has an 8.4 percent weight to the home improvement giant, also one of the largest among all ETFs.

"In terms of year-over-year earnings growth, six of the thirteen retail sub-industries in the S&P 500 are predicted to report growth in earnings for the fourth quarter, led by the Internet Retail (52.1 percent), Drug Retail (20.8 percent), and Home Improvement Retail (9.6 percent) sub-industries. “On the other hand, seven of the thirteen retail sub-industries in the S&P 500 are predicted to report declines in earnings, led by the Home Furnishing Retail (-14.0 percent) and Hypermarkets & Super Centers (-9.0 percent) sub-industries," according to a note.

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