With the all-important holiday shopping season coming up quickly, retail stores are soon going to really know whether or not they’ve had a good year. Retailers can expect anywhere from 25-40 percent of their annual business to come during the holiday season with almost 20 percent of total retail sales falling in that period. In short, the next couple months will define the entire year for retail stores. As such, any investor with an inkling that they might know which way the holiday season is going to go might be interested in these five retail ETFs. With ETFs like these, investors can make broad bets on the industry as a whole at just the time when it’s most likely to swing one way or the other.
Retail ETFs for Holiday Speculation
SPDR S&P Retail ETF (XRT) – SPDR is one of the more trusted and recognized names in ETFs, and their sector and industry specific funds are often the most popular for any given area. Retail is no exception as SPDR’s retail ETF trades at an average volume of over 10 million shares, more than twelve times higher than any other retail ETF. The fund seeks to match the total return performance of the S&P Retail Select Sector Index.
Retail HOLDRS (RTH) – The next most popular retail ETF is the HOLDRS retail ETF. Based on a weighted portfolio of stocks that include shares in various online and brick-and-mortar entities, the fund seeks to give a broad overview of the sector’s performance.
PowerShares Retail Portfolio (PMR) – This PowerShares fund will normally invest at least 90 percent in common stock from the Dynamic Retail Intellidex Index.
Direxion Daily Retail 2x Bull Shares (RETL) and Direxion Daily Retail 2x Bear Shares (RETS) – The two Direxion retail ETFs are mirror images of each other. Both are linked to the Russell 1000 Retail Index, and both are leveraged and seek to move 200 percent of the index’s daily move. However, the Daily Retail 2x Bear Shares is an inverse ETF that moves opposite the direction of the index, making it an easier method for shorting the sector. However, caveat emptor, as Direxion has announced that the Daily Retail 2x Bull and Bear Shares will be shifting on December 1st, along with several other Direxion ETFs, and seeking to match the index’s daily movement at 300 percent. As such, anyone holding shares in these ETFs a week from now will find themselves making considerably more volatile bets than they initially invested in.
Earnings on the Line in Coming Months
When stores throw open their doors on Black Friday, earlier this year than ever before, it will mark the kick-off for the long-awaited holiday shopping season that is crucial to their balance sheets. Any investor interested in betting one way or the other how the fates of the retail sector will swing can use these ETFs to help them speculate.