Easy way to buy retail stocks.
It’s the holidays, and that means shoppers are out in full force. And based on the latest consumer data, it appears that we are going to see some very big spending this December. U.S. consumer confidence is at a 17-year high, according to the Conference Board, and early estimates from groups including the National Retail Federation are predicting brisk growth in holiday spending. Some people may moralize over how consumer-driven the season has become, but the American consumer is a major part of the U.S. economy. That makes this an important time of the year for investors — and particularly for retail stocks. Here are seven such consumer-driven exchange-traded funds worth a look.
SPDR S&P Retail ETF (ticker: XRT)
The most straightforward way to play consumer spending is the XRT, which consists of more than 80 of the biggest names in shopping. Top holdings include mall retailer Express (EXPR), auto parts store AutoZone (AZO) and online merchant Groupon (GRPN). The fund is a bit biased toward apparel, with the subsector making up about 26 percent of the portfolio, but this retail ETF spans a host of specialty retailers and big box stores as well. If you’re looking for a one-stop investment that will cover all corners of retail, XRT is it.
Expense ratio: 0.35 percent, or $35 per $10,000 invested annually.
Amplify Online Retail ETF (IBUY)
Of course, much of the increased consumer spending this December will be online and not at brick-and-mortar stores. Digital giant Adobe (ADBE) recently estimated online sales will top $100 billion this year, after a whopping increase of almost 17 percent in Cyber Monday sales. If you want to focus on e-commerce plays, then, consider the IBUY ETF. A focus group of about 40 holdings that include big names like Amazon.com (AMZN), as well as up-and-comers like car-sales platform Carvana (CVNA), the fund has an interesting angle. And with this fund up about 40 percent so far in 2017, it certainly looks like a profitable one for investors, too.
Expense ratio: 0.35 percent
iShares U.S. Consumer S3rvices ETF (IYC)
What if you don’t care so much about clothes or home goods and instead want to play consumer spending on less tangible things like food and entertainment? Then the IYC is for you. This fund spans 168 unique companies including media giant Walt Disney Co. (DIS) and fast-food restaurant McDonald’s Corp. (MCD). You may not think of these names first when you think of U.S. consumers, but these service providers are an equally important part of the American economy — and your portfolio.
Expense ratio: 0.44 percent
Consumer Discretionary Select Sector SPDR Fund (XLY)
If you want to get broader in your consumer investing strategy instead of buying one of these tactical funds, then consider the XLY. It’s a mashup of the biggest companies that rely on American spending. There are retailers, yes, but also specialty beverage giant Starbucks Corp. (SBUX) and streaming video company Netflix (NFLX). After all, there are lots of ways to spend money beyond buying goods at the mall. This is a particularly compelling strategy if you want to play the rise of the U.S. consumer across all fronts.
Expense ratio: 0.14 percent
Spirited Funds ETFMG Whiskey & Spirits ETF (WSKY)
One of the biggest sources of U.S. consumer spending is bars and alcoholic beverages, and the WSKY is a tiny but quirky play on that trend. Holdings include Diageo (DEO), the brand behind Johnny Walker whiskey and Captain Morgan’s rum, as well as Absolut vodka purveyor Pernod Ricard. The liquor industry had a banner 2016, with total sales volume up 4.5 percent last year to a market that’s worth more than $25 billion. With consumer confidence high in 2017 and tastes still trending toward spirits, it may be a profitable bet to invest in continued growth for this booming sector in the months ahead, too.
Expense ratio: 0.6 percent
Guggenheim S&P Equal Weight Consumer Discretionary ETF (RCD)
With so many options out there within retail, it may be difficult to decide where to focus your consumer investment. That’s where the RCD comes in. This fund contains many of the same names as other funds on this list, except it is formulated to weight each one of its 84 holdings as equally as possible. Sure, the stocks rise and fall a little and eventually take up a bit more or less in the portfolio over time. But regular rebalancing corrects that. This ETF’s approach allows you a truly diversified way to play U.S. consumers.
Expense ratio: 0.4 percent
Direxion Daily Retail Bull 3X Shares ETF (RETL)
Really want to go all-in on consumers? Well supercharge your investments with the RETL ETF that aims to deliver three times the daily returns of a typical retail ETF. It is a play on the same big names as many of these other funds, including mall stores like The Gap (GPS) and big box stores like Big Lots (BIG), but in a much more aggressive way. This is obviously a play only for bold investors, because while the RETL fund will deliver three times the gains on good days, it also goes down three times as fast on the bad ones.
Expense ratio: 1.05 percent
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7 Consumer ETFs for the Holiday Rush originally appeared on usnews.com
