Are you an ETF fan? Here’re five rising retail ETFs to explore in Q4 

Highlights 

  • The SPDR S&P Retail ETF (XRT) gave around 41% return YTD. Its closing price was US$89.63 on Oct 6.
  • The First Trust Nasdaq Retail ETF (FTXD) gave a YTD return of 20.44%, and its dividend yield is 1.03.

  • VanEck Retail ETF (RTH) has a dividend yield of 1.13%; Its next ex-dividend date is Dec 12, 2021. 

The exchange-traded funds, popularly known as ETFs, are investment products that carry the benefits of both stocks and mutual funds. For example, a single ETF typically contains a collection of stocks like a mutual fund, and ETFs are also traded in the exchanges like stocks.

ETFs are available in different categories. For instance, a retail ETF invests in retail sectors like automotive, apparel, departmental stores, e-commerce, electronics, computer stores, drug, home improvement, food and beverage, gasoline stations, and pet supply to name a few.

According to census.gov, its Advance Monthly Retail report for September 2021 will be out on Oct 15. In August, the seasonally adjusted sales were US$618.7 billion, an improvement on July retail sales of US$614.3 billion. Overall, retail sales improved from February, barring a slight dip in May. Also, online retail sales jumped 5.3 percent in August after dipping in July.    

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Here we discuss five retail ETFs. 

SPDR S&P Retail ETF (XRT)

The XRT ETF tracks the broad-based, equal-weighted index of retail stocks in the US. The portfolio consists of companies, including online and direct marketers.

It uses an equal-weighting metric rather than market cap-weighting for selecting stocks. Its issuer is State Street Global Advisor. The fund tracks S&P Retail Select Industry Index. The XRT ETF was started in June 2006. It is an open-ended fund with an expense ratio of 0.35 percent. 

The assets under management (AUM) are worth US$701.19 million, and the weighted average market cap is US$37.56 billion. XRT’s average daily volume is US$254.04 million. The ETF has 105 stocks. Its P/E ratio is 18.60, and its P/B ratio is 3.90. The dividend yield is 0.58 percent.

Its YTD return is approximately 41 percent. The closing price on Oct 6, 2021, was US$89.63.

Its top five stocks include Automotive, Inc., Asbury Automotive Group, Inc., Designer Brands Inc., AutoNation, Inc., and Murphy USA, Inc. 

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Top Retail ETFs: ProShares Pet Care ETF (PAWZ), SPDR S&P Retail ETF (XRT), First Trust Nasdaq Retail ETF (FTXD), Amplify Online Retail ETF (IBUY), VanEck Retail ETF (RTH) 

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First Trust Nasdaq Retail ETF (FTXD)

It uses a multi-factor-weighted index of 50 US retail companies, including liquidity. The 50 selected companies are ranked and weighted on three factors: strong growth in average price return, attractive value through cash-flow-to-price, and low volatility based on historical price fluctuation. It is issued by First Trust and tracks Nasdaq US Smart Retail Index. Its inception date is September 2016. This open-ended fund has an expense ratio of 0.60 percent. The dividend yield is 1.03 percent, and the average daily volume is US$579.13 thousand.

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The assets under management are US$21.85 million, and the weighted average market cap is US$95.24 billion. The ETF has a P/E ratio of 19.56 and a P/B ratio of 5.94. 

FTXD currently holds 52 companies in the portfolio. The top five holdings include GameStop Corp. Class A, CVS Health Corporation, AutoZone, Inc., Walmart Inc., and Kroger Co.

Its YTD return is approximately 20.44 percent. The closing price on Oct 6, 2021, was US$33.52. 

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Amplify Online Retail ETF (IBUY)

IBUY tracks an index of global stocks based on their revenues from online retail sales. The fund includes stocks of those companies having at least 70 percent of their revenues from online sales. Firms can be of any size in terms of market cap. Amplify Investments is the issuer of this ETF, and IBUY tracks EQM Online Retail Index.

It started in April 2016. The open-ended fund has an expense ratio of 0.65 percent. Its assets under management are US$906.70 million, and the average daily volume is US$10.44 million. The weighted average market cap is US$67.74 billion, the P/E ratio is -290.25, and the P/B ratio is 6.42. The fund fell 5.66% YTD and closed at US$108.35 on Oct 6, 2021. 

The total number of holdings of the fund are 73. The dividend yield is 0.13%. Its top five holdings include DoorDash, Inc. Class A, Revolve Group, Inc Class A, Shutterstock, Inc., Netflix, Inc., and Etsy, Inc. 

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VanEck Retail ETF (RTH)

RTH maintains a portfolio of companies that are global retailers with concentrated exposure to US retail giants. This fund tracks the market-cap-weighted index of the 25 largest US-listed companies, with retail revenue comprising a high portion of the total revenue.

VanEck is the issuer of RTH, and the fund tracks MVIS U.S. Listed Retail 25 Index. The fund started in May 2001. Its expense ratio is 0.35 percent. The open-ended fund has assets under management worth US$220.43 million and an average daily volume of US$4.67 million.

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RTH’s weighted average market cap is US$479.22 billion, the P/E ratio is 33.79, and the P/B ratio is 8.30. Its dividend yield is 1.13%, and the next Ex-dividend date is December 12, 2021.

The total number of holdings is 26. Its top five companies are Amazon.com, Inc., Home Depot, Inc., Lowe's Companies, Inc., Costco Wholesale Corporation, and Walmart Inc.

The ETF has given a 10.38 percent return YTD and closed at US$173.85 on Oct 6, 2021.

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Top retail ETFs: ProShares Pet Care ETF (PAWZ), SPDR S&P Retail ETF (XRT), First Trust Nasdaq Retail ETF (FTXD), Amplify Online Retail ETF (IBUY), VanEck Retail ETF (RTH)

Source - pixabay

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ProShares Pet Care ETF (PAWZ)

PAWZ tracks a tier-weighted index of companies in the pet business. It is the first of its kind. It selects the stocks based on one of eight RBICS sub-industries: pet food manufacturing, pet and pet supply stores, pet supplies manufacturing, veterinary pharmaceuticals, diagnostics, product distributors, veterinary services, and internet and retail pet and supply.

ProShares is the issuer of this fund, and PAWZ tracks FactSet Pet Care Index. The fund started in November 2018. The open-ended fund has an expense ratio of 0.50 percent, and assets under management are US$330.73 million. The average daily volume is US$2.34 million.

The weighted average market cap is US$47.22 billion, the P/E ratio is 104.88, and P/B ratio is 6.92, and the dividend yield is 0.66 percent. The fund has 33 companies in the portfolio, including Zoetis, Inc. Class A, IDEXX Laboratories, Inc., Dechra Pharmaceuticals PLC, Freshpet Inc, and Chewy, Inc. It gave an 8.64 percent return YTD and closed at US$77.95 on Oct 6, 2021.

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Bottomline

US retail sales grew by 16.2 percent YoY in August 2021, compared to a 15.2 percent increase in the previous, suggesting a steady growth of the sector. Economists forecast strong growth in the industry in the coming months with the improving economy and pandemic. However, investors should exercise due diligence before investing in stocks.

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