Macy’s, Inc. (M) Q3 Strength Puts These Retail ETFs In Focus

Market Vectors Retail ETF (RTH)

This fund provides exposure to the 26 top retail firms by tracking the Market Vectors US Listed Retail 25 Index. The product has amassed $51.9 million in its asset base and charges 35 bps in annual fees. Volume is low as it exchanges under 47,000 shares per day.

The top three holdings include Amazon (AMZN), WMT and HD which combine to take up nearly 25% of assets. The ETF has a certain tilt toward growth stocks, accounting for half of the portfolio, while sector wise, specialty retail has one-third share. Other sectors such as hypermarkets, departmental stores and healthcare services take double-digit exposure (read: The Comprehensive Guide to Retail ETFs).

The fund gained nearly 38% in the year-to-date time frame while it added 1.49% on the day after Macy’s boosted confidence in the sector. XRT has a Zacks ETF Rank of 2 or ‘Buy’ rating with ‘Low’ risk outlook.

PowerShares Retail Fund (PMR)

This fund follows the Dynamic Retail Intellidex Index and has accumulated $35.3 million in AUM. Volume is light, suggesting additional cost beyond the expense ratio of 0.63%. In total, the product holds 30 securities, which is somewhat concentrated on its top 10 holdings.

Walgreens (WAG), Best Buy (BBY) and Kroger (KR) occupy the top three spots in the basket with a combined 15.75% share. With respect to sectors, specialty retail make up for the largest share at 39%, closely followed by food retail (21%), drug stores (14%) and hypermarkets (13%).

PMR is up 1.04% in the session and over 41% in the year-to-date time frame. The product has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a ‘Medium’ risk outlook.

Bottom Line

Macy’s surprise beat sent the stock higher on the day, and became the cornerstone for gains in other stocks in the space. It drove the U.S. stock market to new highs and injected bullishness ahead of the holiday season.

However, the sector seems to be under pressure from weak consumer confidence, economic and political disarray, and unfavorable calendar shifts that might curtail sales this holiday season. But investors could take advantage of solid earnings results from retailers and play this trend heading into the all-important holiday season.

This article is brought to you courtesy of Eric Dutram.

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