Retail ETFs To Tap On Robust Holiday Sales

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The 2022 holiday shopping season has been solid for retailers as consumers have taken advantage of heavily discounted merchandise amid an overall slowdown in the retail sector over the past few months. This is especially true as retail sales jumped more than expected amid surging prices on everything from food to rent.

Despite the sales splurge, retail ETFs — SPDR S&P Retail ETF (XRT - Free Report), VanEck Vectors Retail ETF (RTH - Free Report), Amplify Online Retail ETF (IBUY - Free Report) and ProShares Online Retail ETF (ONLN - Free Report) — have declined over the past two months. The beaten-down prices could be attractive entry points for investors seeking to tap the upcoming surge arising from the holiday sales data.

Per a report from Mastercard, U.S. retail sales rose 7.6 (for the period Nov 1-Dec 24) from last year, down from an 8.5% increase a year earlier but higher than the expectation of a 7.1% increase. A slowdown from last year is driven by decades-high inflation, rising interest rates, and the threat of a recession that made consumers cautious.

However, Americans’ spending remained unscathed ever since inflation first spiked almost 18 months ago. Inflation has retreated from the four-decade high reached in summer. Online sales jumped 10.6% from a year ago and in-person spending rose 6.8%. Sales in the apparel and restaurants categories, rose 4.4% and 15.1%, respectively, while electronics sales dropped 5.3%. Department stores registered a modest 1% increase over 2021.

Below, we have highlighted ETFs in detail:  


SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid and small-cap stocks. It holds well-diversified 95 stocks in its basket, with none making up for more than 1.4% share. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, automotive retail, specialty stores, and Internet & direct marketing retail.

SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $338.1 million and an average trading volume of 4.5 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

VanEck Vectors Retail ETF (RTH)

VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top two firms with double-digit exposure each, while the other firms hold no more than 8.6% share.

VanEck Vectors Retail ETF has amassed $145.8 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 11,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #2 with a Medium risk outlook.

Amplify Online Retail ETF (IBUY)

Amplify Online Retail ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. IBUY holds 58 stocks in its basket, with none accounting for more than 3.1% of assets. Amplify Online Retail ETF has the largest allocation in marketplace at 45% and traditional retail at 44%.

Amplify Online Retail ETF has attracted $189.1 million in its asset base and charges 65 bps in annual fees. IBUY trades in an average daily volume of 30,000 shares.

ProShares Online Retail ETF (ONLN)

ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels, and then zeros in on companies reshaping the retail space. It tracks the ProShares Online Retail Index, holding 25 stocks in its basket. ONLN is highly concentrated on the top two firms, while the other firms hold no more than 6.5% of assets. American firms make up 69.6% of the portfolio, while Chinese firms account for a 21.2% share.

ProShares Online Retail ETF has accumulated $116 million in its asset base and charges 58 bps in annual fees. ONLN trades in an average daily volume of 56,000 shares.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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