Retail ETFs Hitting Highs Ahead Of Holidays

|
Includes: RTH, XLY
by: Benzinga

Summary

The retail sector is on fire with many of its biggest names trading at or near new yearly highs.

The surge by a large number of retailers could be attributed to the increased discretionary income available to American families.

Highlighted are two retail ETFs that will be affected by the solid performance in the retail sector.

By Matthew McCall

The retail sector is on fire with many of its biggest names trading at or near new yearly highs.

Heading into the most lucrative part of the year for retailers, they will be looking to make the most of this holiday season and end 2014 with a bang.

The surge by a large number of retailers could be attributed to the increased discretionary income available to American families.

It appears that many of those families are using their excess discretionary income at their local Wal-Mart Stores, Inc. (NYSE:WMT), Costco Wholesale Corporation (NASDAQ:COST) and a number of other retailers.

Since October 16, Wal-Mart is up 7 percent, Costco is up 12 percent (as well as sitting at an all-time high) and Target Corporation (NYSE:TGT) is up 12 percent. Macy's, Inc. (NYSE:M) and TJX Companies Inc (NYSE:TJX) are experiencing a very similar surge as well.

Highlighted below are two retail ETFs that will be affected by the solid performance in the retail sector.

The Consumer Discretionary Select Sector SPDR ETF (XLY)

XLY tracks 86 companies that are considered to be in the consumer discretionary sector. The top four individual holdings include:

  • Walt Disney Co (NYSE:DIS) at 6.7 percent
  • Comcast Corporation (NASDAQ:CMCSA) making up 6.5
  • Home Depot, Inc. (NYSE:HD) with a 6.3 percent holding
  • Amazon.com, Inc. (NASDAQ:AMZN) coming in at 5.6 percent

The ETF is up 8 percent over the last 12 months and 6 percent over the last six months. XLY has an expense ratio of 0.16 percent. The solid performance by XLY going into the holiday season is promising news for all retailers. With many American consumers strapped with more discretionary income than they've had in years, retailers are looking to make this a lucrative holiday season.

The Market Vectors Retail ETF (RTH)

RTH follows 26 of the largest companies in the retail industry. The top four holdings include:

  • Wal-Mart making up 10.5 percent
  • Amazon at 9.2 percent
  • Home Depot at 8 percent
  • CVS Health Corp (NYSE:CVS) at 7.5 percent

RTH has performed very well up 12 percent over the last 12 months and 14 percent over the last six months. The retail ETF is currently sitting at an all-time high and is up 11 straight sessions. The ETF has an expense ratio of 0.35 percent.

Consumer confidence has definitely been tested this year and it is a very positive sign for the retailers that consumers are willing to spend their discretionary income and appear to be more optimistic heading into the holiday season.

Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.