SPDR S&P Retail ETF (NYSEARCA:XRT)
This product targets just the retail corner of the broad consumer space by tracking the S&P Retail Select Industry Index. In total, the fund holds 104 securities in its basket that are widely spread across each component as none of these holds more than 1.32% of total assets. The fund has been able to manage assets worth $810.9 million.
In terms of sector holdings, Apparel Retail takes the top spot with one-fourth share of the basket while Specialty Stores and Automotive Retail round off to the next two spots. The ETF charges 35 bps a year in fees.
XRT gained about 0.49% in the key trading session and has a Zacks ETF Rank of 2 or ‘Buy’ rating with a medium risk outlook.
PowerShares S&P SmallCap Consumer Discretionary (NASDAQ:PSCD)
PSCD is a compelling choice for investors looking for a targeted bet in the small cap space. The fund tracks the S&P Small Cap 600 Capped Consumer Discretionary Index, giving investors exposure to U.S. consumer discretionary companies.
The fund holds a basket of 100 stocks and is relatively cheaper, charging investors 29 basis points as annual fees. The top three holdings of the fund are Live Nation Entertainment Inc (2.90%), Wolverine World Wide Inc. (2.67%) and Buffalo Wild Wings Inc. (2.67%).
The fund was up 0.49% yesterday. The trend is expected to continue at least in the short run, given the fact that the fund has a favorable Zacks ETF Rank of 2 with a high risk outlook.
From the chart depicted above, it is evident that retail or consumer discretionary ETFs took a beating in the past month. All four above-mentioned ETFs lost in the range of 4.6% to 7.2% as against just 0.8% loss noticed in SPY. This was largely because of high beta pain and record chills in the U.S.
However, this huge selling pressure should make the space reasonably valued. In fact, popular retail ETF XRT currently trades at forward P/E multiple of 17.25 times while SPY trades at a forward P/E multiple of 15.55. On a P/B basis as well, XRT and SPY are not much different. XRT’s P/B ratio stands at 2.76 while SPY’s P/B ratio is 2.48 (as of April 14, 2014).
Investors should also note that both retail/wholesale and consumer discretionary sectors will likely log double digit growth rate this year and the next. Once the high-beta pain heals, we believe the above-mentioned consumer ETFs are set to gain in the second quarter.
This article is brought to you courtesy of Eric Dutram.