This Retail ETFs Balanced Approach Means That No Single Company Will Lead The ETF By The Nose

“While retail earnings have diverged this week, the SPDR S&P Retail ETF (XRT) continued to perform well because of its balanced approach. The relatively affordable ETF, with a 0.35% gross expense ratio, has holdings in 64 companies in the retail sector. The fund does not allocate a heavily weighted portion of its net assets to any individual company. For example, the largest holding, HSN(HSNI), the home shopping retailer, accounts for only 2.3% of the fund,” Don Dion Reports From The Street.

Dion goes on to say, “A positive or negative report from a company is not capable of significantly moving the entire fund. That’s good because there have been some mixed reports this week. Meanwhile, shares of XRT reached a new 52-week high yesterday despite some misses here and there. Its balanced approach has insulated investors from the few misses such as J. Crew while reflecting the overall recovery in retail. In total, the retailers in XRT that have already reported this week account for 11.7% of the fund. If all of these companies had reported positively or negatively, it could have made a significant impact on the fund, but the reports were mixed, allowing XRT to continue its bullish trend.”

“Due to the mixed reports, however, XRT was up only 0.9% through Wednesday, while the S&P 500 increased by 0.6%. Shares of XRT were losing ground this morning, along with the broader market. If investors are bullish on retail, they can confidently go with XRT. Its balance approach means that no single company will lead the ETF by the nose and since the start of 2010, XRT has increased by about 11% while the S&P 500 is up only 3%. It has also outperformed its two main retail ETF rivals: Retail HOLDRS (RTH), up 4%, and PowerShares Dynamic Retail(PMR), up 9%. Until the recovery strengthens and the earnings reports turn more generally positive, XRT remains the best way to play retail,” Dion Reports.

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Here are some details on the 3 retail ETFs mentioned including some of the top retailers in each ETF below:

The investment (XRT) seeks to replicate as closely as possible, before expenses, the performance of an index derived from the oil and retail segment of a U.S. total market composite index. The fund uses a passive management strategy to track the total return performance of the S&P Retail Select Industry index. The index represents the retail sub-industry of the S&P Total Market index.The fund is nondiversified.

TOP 10 HOLDINGS ( 17.64% OF TOTAL ASSETS)  
 
Company Symbol % Assets
Aeropostale Inc Common Stock (ARO) 1.69
CarMax Inc (KMX) 1.84
The Children’s Place Retail Sto (PLCE) 1.8
Dick’s Sporting Goods Inc Commo (DKS) 1.72
The Dress Barn, Inc. (DBRN) 1.74
Footlocker Inc. (FL) 1.83
HSN, Inc. (HSNI) 1.79
Jo-Ann Stores, Inc. Common Stoc (JAS) 1.75
Sears Holdings Corporation (SHLD) 1.79
Tractor Supply Company (TSCO) 1.69

Chart for SPDR S&P Retail (XRT)

The investment (RTH) seeks to diversify your investments in the retailing industry through a single, exchange-listed instrument representing your undivided beneficial ownership of the underlying securities. The trust holds securities issued by specified companies that, when initially selected, were in the retailing industry. Except when a reconstitution event, distribution of securities by an underlying issuer or other event occurs, the group of companies will not change. There are currently 20 companies included in the Retail HOLDRS.

TOP 10 HOLDINGS ( 83.00% OF TOTAL ASSETS)  
 
Company Symbol % Assets
Amazon.com, Inc. (AMZN) 10.03
Best Buy Co., Inc. Common Stock (BBY) 3.78
Costco Wholesale Corporation (COST) 5.04
CVS Caremark Corporation Common (CVS) 4.8
Home Depot, Inc. (The) Common S (HD) 12.32
Lowe’s Companies, Inc. Common S (LOW) 6.97
Target Corporation Common Stock (TGT) 8.24
TJX Companies, Inc. (The) Commo (TJX) 3.9
Wal-Mart Stores, Inc. Common St (WMT) 20.49
Walgreen Company Common Stock (WAG) 7.43

Chart for Retail HOLDRs (RTH)

The investment (PMR) seeks investment results that correspond generally to the price and yield, before fees and expenses, of the Dynamic Retail Intellidex index. The fund normally invests at least 80% of total assets in common stocks of retail companies. In pursuit of its objective, it may invest at least 90% of total assets in common stocks that comprise the Retail Intellidex. The index is comprised of stocks of 30 U.S. retailers. It is nondiversified.

TOP 10 HOLDINGS ( 44.23% OF TOTAL ASSETS)  
 
Company Symbol % Assets
Bed Bath & Beyond Inc. (BBBY) 4.9
Dollar Thrifty Automotive Group (DTG) 3.51
eBay Inc. (EBAY) 4.75
Gap, Inc. (The) Common Stock (GPS) 4.46
Genuine Parts Company Common St (GPC) 4.93
Hertz Global Holdings, Inc Comm (HTZ) 3.17
Home Depot, Inc. (The) Common S (HD) 4.91
Target Corporation Common Stock (TGT) 4.75
TJX Companies, Inc. (The) Commo (TJX) 4.44
Walgreen Company Common Stock (WAG) 4.41

Chart for PowerShares Dynamic Retail (PMR)

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