This article was originally published on ETFTrends.com.
The retail sector has been spurred by a tailwind of positive economic data from the Commerce Department with retail sales increasing by 0.5% in July--more than anticipated, which signals that the economy is full steam ahead in the third quarter thus far. Retail ETFs are posed to gain, but with three times the leverage, Direxion Daily Retail Bull 3X ETF (RETL) could turn a downtown window shopping stroll into a full-on spending spree for retail investors.
Based on Yahoo! Finance performance figures, RETL is up 23.72% year-to-date and 59.26% the past year. Since May, RETL has climbed above its 50-day moving average, touched down that level in early August and is now back above, which could be due to a boost from the back-to-school shopping season.
Related: Data Bodes Well for Retail ETFs
RETL seeks daily investment results of 300% of the daily performance of the S&P Retail Select Industry Index. RETL invests in securities found within the index, which is a modified equal-weighted index that measures the performance of the stocks comprising the S&P Total Market Index.
For this school year, retail shops are expecting a robust shopping season as multinational professional firm Deloitte is forecasting that this year's back-to-school spending will increase by 2.2 percent to $27.6 billion, with the average spending per household rising to $510 from $501 last year, including $112 on school supplies--up from $104 the previous year.
Moreover, other retail ETFs like the SPDR S&P Retail ETF (XRT) have made all-time highs as of late--a byproduct increased retail sales data, but with triple the leverage, RETL is simply able to outperform by a wider margin.
"The economy appears to be very well-positioned to continue to grow," said Jim Baird, chief investment officer at Plante Moran Financial Advisors. "The persistently optimistic consumer sector is doing its part to keep the growth engine going, and retailers are benefiting."
The data continues to be positive for RETL and other retail sector ETFs as stores like Walmart are projected to do $51 billion in sales this year and target is projecting $74 billion in revenues. Online presence and delivering products to consumers in expedient fashion will continue to be key drivers in the sector moving forward, and RETL is certainly poised to gain, particularly if the current bull market can sustain its upward trajectory.
For more information on the consumer sector, visit our consumer discretionary category.
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