Target’s crash has this retail ETF falling as well

May 18, 2022 10:09 AM ETVanEck Vectors Retail ETF (RTH), TGTSPYBy: Jason Capul, SA News Editor

Minnetonka, USA - June 21, 2012

jimkruger/iStock Unreleased via Getty Images

The VanEck Retail ETF (NASDAQ:RTH) tilted lower at the opening bell, as it represents the exchange traded fund with the largest stake in Target Corporation (NYSE:TGT), which has plunged more than 25% after it reported worrisome Q1 results and unfavorable guidance for Q2.

At the start of trading, RTH has drifted lower by 4.7% and TGT has crashed 25.6%.

RTH has a condensed portfolio of 26 stocks, and Target represents the fund's fifth most significant holding, weighted at 4.85%. The fund centers on retailing and looks to offer exposure to stocks across the sector, including areas like distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and other staple retailers.

The fund offers a 0.35% expense ratio and finds itself trading lower on the year by 19.7%.

Taking a step back though, the ETF has outperformed the overall market over a five-year period. RTH is +92% during that span, while the SPDR S&P 500 Trust ETF (SPY), which mirrors the S&P 500, is +70%.

Target has dragged RTH lower after the firm announced that its operating income dropped to $1.3B from $2.4B driven primarily by a decline in the gross margin rate during the quarter.

Retail exchange traded funds have had a busy week, not only because of TGT, but also the better-than-expected monthly retail sales statistics that came in on Tuesday. The sector also faced the rather shaky earnings released by industry heavyweight Walmart.

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