The retail sector is immense and contains nearly everything that can be bought or sold. Thanks to humanity’s need to use “stuff,” retail is not going away soon. Because of the vast nature of retail, discovering which securities to invest in can be a daunting task. Fortunately, retail exchange-traded funds (ETFs) exist to help alleviate the issue. Each fund contains several stocks from the industry, offering the chance to pick up multiple stocks for one price. But what are the best retail ETFs for an investor?
Retail sales continue to see 5% growth year after year, and e-commerce is slated to cross the $1 trillion mark in 2022. It is estimated online retail sales will total about 15.9% of all retail sales in 2022. This growth makes it a solid investment opportunity for anyone interested in the long term. Considering the size of the retail industry, investors should have some exposure to it. However, it is hard to pick winners and losers in retail. An investor may want to try ETFs instead of stocks.
This article showcases some of the best retail ETFs currently available.
StockRover is one of the best stock, ETF, and mutual fund screeners and analysis tools. It has 8,500+ stocks, 4,000 ETFs, and 40,000 mutual funds. You can get access up to 650+ metrics and financial data. The award winning Stock Rover platform includes watchlists, portfolio integration, portfolio rebalancing, e-mail and text alerts, future income forecasts, etc.
VanEck Vectors Retail ETF (RTH) is one of a handful of retail industry ETFs looking to continue a trend of upward momentum on the stock market. It mirrors the MVIS US Listed Retail 25 Index, containing a nearly identical list of 25 retail stocks. Holdings include everything from home improvement to warehouse clubs, automotive retailers, department stores, and discount stores.
Each of the companies in this VanEck fund are brick and mortar retailers, but some stand out for their online exposure. Top investments are Amazon (AMZN) at 20.49%, Home Depot (HD) at 8.88%, and Walmart (WMT) at 8.16%. The expense ratio is a reasonable 0.35%.
This 100% stock fund showcases retail companies found almost entirely within the United States. Only 4% of businesses reside in the United Kingdom. Two-thirds of these companies fall into the consumer discretionary space, with 23% dipping into consumer staples and another 10% in healthcare. Assets under management (AUM) totaled over $206 million, making it a smaller fund.
According to StockRover*, Investors will be happy to hear that the fund has a 20.78% rate of return for the last three years, indicating solid past performance. Shares currently sell for around $182, significantly less than a single stock from Amazon. In addition, the ETF pays out a 0.82% dividend yield.
The SPDR S&P Retail ETF (XRT) is a well-diversified exchange-traded fund created to follow the S&P Retail Select Industry Index as its underlying index. It holds 108 stocks, offering broad exposure to the retail industry.
Investors looking for a vast portfolio will be pleased to learn that XRT weights its assets reasonably equally, with no retailer exceeding 2% of the asset pool. Top companies include GameStop (GME) at 1.51%, Ollie’s Bargain Outlet Holdings (OLLI) at 1.30%, and Guess? (GES) settling in at 1.25%. If you’re looking at investing, expect to pay 0.35% for expense ratio fees.
Holdings cover several industries, with nearly 40% going to the internet and direct marketing and apparel. Specialty stores and automotive make up another 35%, with the remainder trickling down into areas like food retail, department stores, and electronics. Total AUM reaches upwards of $770 million.
Like VanEck, the SPDR ETF saw a 20.61% return over the last three years. The fund has come into some volatility of late but is still believed to be a solid investment opportunity. Investing shouldn’t break the bank at roughly $76 per share. While waiting for shares to trend upward, you’ll still enjoy a 1.90% dividend yield according to StockRover*.
The Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD) is based on the S&P 500 Equal Weight Consumer Discretionary Index. The ETF invests at least 90% of its assets into retail stocks that make up the index.
Asset weight is pretty evenly distributed among 52 securities in the retail industry. The ETF shies away from a specific industry, covering companies across multiple industries. Top holdings include Tesla (TSLA) at 2.07%, Dollar General (DG) at 2.00%, and Norwegian Cruise Line (NCLH) at 1.99%.
Total assets under management eclipse the $430 million mark across all companies. Most fall into the mid to large-cap range, offering more overall stability. Those looking to invest in this ETF must overcome a reasonable 0.40% expense ratio.
Over the last three years, RCD has grown 10.44%. Unfortunately, this number includes a considerable drop from when the retail industry suffered at the onset of the Covid pandemic. Nevertheless, shares have recovered nicely, trading at over $130 at the moment. The ETF also pays out a dividend yield of 0.72% according to StockRover*
ProShares Online Retail ETF (ONLN) contains 39 exclusively online retailers that capitalize on the nearly four billion individuals now shopping over the internet. Holdings come from the ProShares Online Retail Index, which looks at companies selling through non-store methods. 75% of companies are based in the United States, with most of the remainder in China and Taiwan.
A few companies reign supreme within the fund, while other stocks carry significantly less weight. Those at the pinnacle include Amazon (AMZN) at 24.0%, Alibaba (BABA) at 10.7%, and eBay (EBAY) at 5.6% of the total. The expense ratio for this ETF is 0.58%.
Total assets under management reach into the $462 million range, and a quarter of that is direct from Amazon. All stocks represent online retailers that focus on consumer spending. Investors looking to add a retail industry ETF to their portfolio that hinges on online marketplaces should look no further.
Current share prices are close to $40, following a downward slide over the last year. Access to online sales giants at this price point could make for a worthwhile investment. Although shares are down, the ETF has still seen a 6.73% gain over the last three years according to StockRover*.
The Amplify Online Retail ETF (IBUY) corresponds to the EQM Online Retail Index. This index owns 78 stocks that must get at least 70% revenue from the online sector, not brick-and-mortar stores. In addition, 75% of these stocks come from the United States, with the remaining 25% representing 15 other countries.
Nearly half of the holdings in Amplify’s ETF fall into the traditional retail space, with 37% specific to the online market. The remaining 13% of stocks in this portfolio fall into the travel sector. No single stock carries much weight, with the highest barely capping 3.5% of total volume. As far as expense ratios go, IBUY’s is higher than other retail ETFs at 0.65%.
Interestingly, the top two retail stocks in the fund come from the travel market. Expedia (EXPE) sits in the top spot at 3.57%, with Airbnb (ABNB) following up at 2.99%. Chegg (CHGG) at 2.87% dabbles in educational supplies. Total assets surpass the $358 million mark according to StockRover*.
This fund has grown 10.59% over the last three years, revealing a favorable investment option. However, shares cost close to the $60 mark after seeing some volatility over the previous year.
The Global X E-Commerce ETF (EBIZ) models the Solactive E-commerce Index. It focuses on businesses capitalizing on e-commerce platforms and software and selling goods and services online. The fund features a total of 41 unique holdings.
No single stock has the lion’s share of weight in the ETF, with GoDaddy (GDDY) in the top spot at 5.54%. The website builder is followed by Expedia (EXPE) at 5.27% and Williams-Sonoma (WSM) at 4.81%, respectively. Its expense ratio sits right at 0.50%.
Share distribution is most heavily in the consumer discretionary space, representing nearly 70% of the fund. This percentage is complemented by information technology and communications, making up 20% of what remains. The United States carries 57% of the ETF’s stocks, with China coming in a distant second at 24%.
Trading at $20 per share, Global X’s ETF is the most cost-effective fund on this list. Even after a bumpy 2021, EBIZ is still up 8.62% over the last three years according to StockRover*. Although not high, the fund pays out a dividend yield of around 0.30% to further sweeten the pot.
People continue buying products out of necessity and convenience, whether in brick-and-mortar stores or online. Because of this, the retail industry isn’t going anywhere. Big-box stores like Walmart (WMT) and online retail companies like Amazon continue to grow.
Exchange-traded funds from this sector are an excellent way for investors to get broad exposure to stocks from the retail industry. In theory, a sector or industry ETF is an easy way to manage multiple stocks, as they all fall under one umbrella. Similarly, if one stock in the fund flounders, others should help keep the ETF from significantly declining.
Where a single share of Amazon would set you back over $3,000, these funds make it easy to invest in these big names without breaking the bank. Investing in the most expensive ETF on this list will only set you back at just over $100 per share.
Retail ETFs are commonly listed on major exchanges like NASDAQ or the New York Stock Exchange (NYSE). As a result, it’s easy to invest in these funds through any brokerage that trades on either market.
Stock Rover is a leading investment research and portfolio management platform offering more than 8,500 stocks, 4,000 ETFs, and 40,000 mutual funds in the United States and Canada.
Large range of metrics and information about individual stocks. There are also screeners, investment news, research reports, charting capability, analyst rankings, watch lists, portfolios, etc.
Best Buy and Hold Screener by Investopedia. Best of the Web and Editor’s Choice by American Association of Individual Investors (AAII).
Try Stock Rover free for a 14-day trial.
The retail industry has been around for an extremely long time and will continue to be so long as people need to buy products to live. Moreover, the past indicates that retail stocks can come out the other side stronger than before, even in times of economic crisis or bear markets.
Retail ETFs are a great way to plug into the sector without juggling individual stocks from several industries. They can also provide a means to snag a piece of lucrative companies such as Amazon, Booking, and AutoZone that would typically set you back a couple of thousand dollars per share.
Whether a new trader or an experienced guru, ETFs are often lower-risk investments that fit well into any portfolio looking for long-term slow growth.
Disclosure: The author has no ties to or holdings in any of the securities listed above
Related Articles on Dividend Power
Here are my recommendations:
- Simply Investing Report & Analysis Platform or the Course can teach you how to invest in stocks. Try it free for 14 days.
- Sure Dividend Newsletter is an excellent resource for DIY dividend growth investors and retirees. Try it free for 7 days.
- Stock Rover is the leading investment research platform with all the fundamental metrics, screens, and analysis tools you need. Try it free for 14 days.
- Portfolio Insight is the newest and most complete portfolio management tool with built-in stock screeners. Try it free for 14 days.
Receive a free e-book, “Become a Better Investor: 5 Fundamental Metrics to Know!” Join thousands of other readers !
*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.
Noah Zelvis is an American copywriter for The Stock Dork who is on a mission to help clarify the nuances of the financial world. With a background in tech design, Noah is no stranger to numbers and financial data. He now uses these powers for good by writing reviews for The Stock Dork. When he’s not working, you’ll likely find Noah out running or traveling.