Shop these retail ETFs for the holiday season
Holiday sales were not as merry as last year. Shopper traffic from Thanksgiving Day through Sunday dipped 5.2 percent from 2013, according to the National Retail Federation, which estimates consumers spent on average about $380.95, down 6.4 percent from $407.02 last year.
Instead of trying to guess which retailers will come out ahead this season Tom Lydon, Editor of ETF Trends, recommends buying an ETF that spans the entire sector. “If you want to get a proxy of retailers - Amazon, CVS, Wal-Mart, Home Depot - Market Vectors has a great retail-based ETF.” Wal-Mart (WMT) is the largest holding in the Market Vectors Retail ETF (RTH), representing 10 percent of the fund, while CVS (CVS) and Home Depot (HD) account for 7 to 8 percent each.
'Tis also the season when nasty weather can keep shoppers at home, circumstances retailers struggled with last year, recalls Lydon. “The big wild card, as we all know, is weather. We had a little bit of a dent in holiday shopping last year due to weather.” Should this season shape up to be a stormy one, Lydon suggests investors consider the First Trust Dow Jones Internet ETF (FDN) or the PowerShares NASDAQ Internet Portfolio (PNQI). Both include Amazon (AMZN), eBay (EBAY) and Google (GOOG) as top holdings.
Overall, retail sales are expected to rise 4.1 percent this year, up from 3.1 percent in 2013, according to the National Retail Federation. However, retailers may do even better thanks to several tailwinds: falling gas prices now at $2.81 a gallon per AAA, a 5.9% U.S. unemployment rate and a rising stock market.
Because consumer spending accounts for 70% of the U.S. economy, a strong holiday shopping season could drive even further gains for the SPDR S&P 500 ETF (SPY).
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