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Top 10 Consumer Discretionary & Retail ETFs

| February 15, 2013 | Comments (0)

Consumer DiscretionaryThe consumer sector is said to comprise nearly two-thirds of U.S. GDP growth. For that reason alone, focusing on conditions in this sector is important for all investors. The list of ETFs available is growing and related indexes can be quite different from one another. Some ETF issues are new and have yet to gain wide support despite being well structured with a linked index and low fees.

For purposes of this review we’ve excluded Consumer Staples since that sector is a unique category.

One strange thing you might discover is some popular ETFs have holdings and weightings which are surprising and not intuitive despite good returns. For many investors, knowing what you own or wish to own is important. Retail and related consumer issues can offer dramatic examples of what’s under the hood and perhaps offer some surprises.

Consumer Discretionary and Retail sectors have been excellent performers in early 2013 despite what some have perceived as a poor holiday sales period. Part of this may be the improving housing market in addition to a rising stock market which may build consumer confidence. Whatever you think of employment conditions, the declining unemployment rate is also building confidence since the media is promoting conditions positively. And, there is evidence of pent-up demand for new technological gadgets, autos and home improvement goods.

It doesn’t hurt that roughly 3 million American homeowners are living rent-free by not paying their mortgages freeing up discretionary spending.  The record number of Americans (47 million) on food stamps is another source of spending. Further, retail sales data can get a boost from the Student Loan bubble which some have used for personal spending as opposed to tuition payments. And, as a last note of cynicism is the record number of people receiving unemployment benefits, which also contributes to spending.

In my latest ebook, “” I handpick the best ETFs even further  in the US Equities space in 26 subcategories, ranging from different market capitalizations and approaches, to sector and subsector-specific ETFs, to dividend and high yield dividend ETFs. This ebook is just the first in a series that aims to help you construct a comprehensive, well-balanced portfolio of ETFs from across the wide spectrum of markets and asset classes available. The next books in the series will focus on overseas ETFs, fixed income ETFs, alternative ETFs, and portfolio construction.

A few ETFs below feature a technical view of conditions from monthly chart views. If interested in seeing current charts for these ETFs, you need look no further than by reading my blog, .  I post many of ETFs on a daily basis using daily and/or weekly charts and if looking for monthly charts, most of these are also featured within my new ebook as mentioned above.

When viewing my charts, my simple recommendation for  longer-term investors is that they stay “above” or on the “right-side” of the 12-month simple moving average (MA). When prices are above the MA, stay long, and when below, remain in cash or short. Investors more interested in a fundamental approach may not care so much about technical issues, instead preferring to buy when prices are perceived as low and sell when high, among other reasons.

At  this purely fundamental strategy is not our only approach.  newsletter receive added trading alerts for many of these ETFs when markets become extended. Our proprietary trading system features ETFs with weekly and daily charts, and provide investors signals as to when to exit and/or hedge open positions, or when conditions become overbought or oversold.

 


 


XLY follows the Consumer Discretionary Select Sector Index from that portion of the S&P 500 Index. The fund was launched in December 1998. The expense ratio is .18%. AUM is nearly $ 4 billion and average daily trading volume is 6 shares. As of late January 2013 1.52% and YTD return 7.30%. The one year return was 24.74%.

Of note is the index linked to XLY consists of large companies which are components within the S&P 500 Index and have strong consumer characteristics but away from typical retail issues for example.

ProShares offers leveraged long (UCC) and short (SCC) issues for investors wishing to hedge or speculate.

Data as of January 2013
XLY Top Ten Holdings & Weightings

  • Comcast Corp Class A (CMCA): 6.71%
  • Home Depot, Inc. (HD): 6.24%
  • Amazon.com Inc (AMZN): 6.14%
  • McDonald’s Corporation (MCD): 5.98%
  • Walt Disney Co (DIS): 5.96%
  • News Corporation Class A (NWSA): 3.48%
  • Ford Motor Co (F): 3.33%
  • Time Warner Inc (TWX): 3.06%
  • Lowe’s Companies Inc. (LOW): 2.70%
  • Starbucks Corporation (SBUX): 2.69%

XLY 







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


XRT follows the S&P Retail Select Industry Index which is an equally weighted index. The fund was launched in June 2006. The expense ratio is .35%. AUM equal $500M and average daily trading volume is 4.5M shares As of late January 2013  the annual dividend yield was 1.60% and YTD return 7.61%. The one year return was 23%.

In the holdings data below you’ll see more of what you’d expect from a consumer oriented ETF.

Data as of January 2013
XRT Top Ten Holdings & Weightings

  • Rite Aid Corporation (RAD): 1.35%
  • Shutterfly, Inc. (SFLY): 1.15%
  • Asbury Automotive Group Inc (ABG): 1.12%
  • Monro Muffler/Brake, Inc. (MNRO): 1.12%
  • Conn’s, Inc. (CONN): 1.10%
  • Lithia Motors, Inc. Class A (LAD): 1.10%
  • Casey’s General Stores, Inc. (CASY): 1.10%
  • CarMax, Inc. (KMX): 1.09%
  • Genesco, Inc. (GCO): 1.09%
  • Finish Line Inc (FINL): 1.08%

 

XRT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


VCR follows the MSCI US Investable Market Consumer Discretionary 24/50 Index which consists of small, medium and large companies in the consumer discretionary sector. The index also includes automotive, household durable goods, textiles and apparel, and leisure equipment. Hotels, restaurants and of the leisure facilities and services are also included. The fund was launched in January 2004. The expense ratio is .14%. AUM equal $650M and average daily trading volume is 75K shares. As of late January 2013 the annual dividend yield was 1.43% and YTD return 7.40%. The one year return was 24%.

Data as of January 2013
VCR Top Ten Holdings & Weightings

  • McDonald’s Corporation (MCD): 4.87%
  • Home Depot, Inc. (HD): 4.83%
  • Amazon.com Inc (AMZN): 4.79%
  • Walt Disney Co (DIS): 4.64%
  • Comcast Corp Class A (CMCSA): 3.79%
  • Time Warner Inc (TWX): 2.27%
  • News Corporation Class A (NWSA): 2.23%
  • Target Corp (TGT): 2.08%
  • Starbucks Corporation (SBUX): 2.01%
  • Lowe’s Companies Inc. (LOW): 1.86%

 

VCR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


FXD follows the StrataQuant Consumer Discretionary Index which is considered an “enhanced” index. Various quantitative measures and inputs are analyzed and then constructed from the Russell 1000 Index to create the index constituents. The fund was launched in May 2007. The expense ratio is .70%. AUM of $520M and average daily trading volume is 224K shares. As of late January 2013 the annual dividend yield was 1.34% and YTD return 8.35%. The one year return was 17.68%.  An enhanced index can outperform as markets rise but perhaps underperform when falling.

Note in the holdings the assets are fairly equally weighted.

Data as of January 2013
FXD Top Ten Holdings & Weightings

  • GameStop Corp Class A (GME): 1.67%
  • Dillards, Inc. (DDS): 1.65%
  • LKQ Corporation (LKQ): 1.59%
  • Ford Motor Co (F): 1.56%
  • TRW Automotive Holdings Corp (TRW): 1.55%
  • Lear Corporation (LEARQ): 1.55%
  • DeVry, Inc. (DV): 1.53%
  • Fortune Brands Home & Security Inc (FBHS): 1.49%
  • Polaris Industries, Inc. (PII): 1.41%
  • Deckers Outdoor Corporation (DECK): 1.40%

 

FXD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


IYC follows the Dow Jones U.S. Consumer Services Index. The fund was launched in June 2000. The expense ratio is .48%. AUM equal $355M and average daily trading volume is 45K shares. As of late January 2013 the annual dividend yield is 1.40% and YTD return 7.19%. The one year return was 25.80%.

Data as of January 2013
IYC Top Ten Holdings & Weightings

  • Wal-Mart Stores Inc (WMT): 5.88%
  • Comcast Corp Class A (CMCSA): 5.11%
  • Home Depot, Inc. (HD): 4.76%
  • Amazon.com Inc (AMZN): 4.69%
  • McDonald’s Corporation (MCD): 4.56%
  • Walt Disney Co (DIS): 4.54%
  • CVS Caremark Corp (CVS): 3.10%
  • eBay Inc (EBAY): 3.06%
  • News Corporation Class A (NWSA): 2.65%
  • Time Warner Inc (TWX): 2.33%

 

IYC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


RXI follows the S&P Global Consumer Discretionary Index. The fund was launched in September 2006. The expense ratio is .48%. AUM equal $170M and average daily trading volume is 45K shares. As of late January 2013 the annual dividend yield was 1.34% and YTD return 6.00%. The one year return was 23%.

Data as of January 2013
RXI Top Ten Holdings & Weightings

  • Toyota Motor Corp (7203): 5.28%
  • Comcast Corp Class A (CMCSA): 3.64%
  • Home Depot, Inc. (HD): 3.40%
  • Amazon.com Inc (AMZN): 3.40%
  • McDonald’s Corporation (MCD): 3.30%
  • Walt Disney Co (DIS): 3.23%
  • Honda Motor Co Ltd (7267): 2.49%
  • Daimler AG (DDAIF): 2.09%
  • Ford Motor Co (F): 1.92%
  • LVMH Moet Hennessy Louis Vuitton SA (MC): 1.89%

 

RXI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




RTH is the newly converted ETF which was once Merrill Lynch HOLDRs and assumed by Van Eck. The weightings for HOLDRs given the structure as a trust and could not be changed. Van Eck has chosen to create a new index, Market Vectors US Listed Retail 25 Index. Van Eck hasn’t changed the weightings that much as of the re-launch in December 2011. This decision was made so as not to disrupt current investors in the previous ETF at this time. The original HOLDRs was launched in May 2001. The expense ratio is .35%. AUM equal $32M and average daily trading volume is 100K shares. As of late January 2013 the annual dividend was 1.90% and YTD return was 6.20%. The one year return is not available due to the conversion from the trust status to an ETF.

Data as of January 2013
Top 10 Holdings & Weightings

  • Wal-Mart Stores Inc (WMT): 13.47%
  • Home Depot, Inc. (HD): 10.47%
  • Amazon.com Inc (AMZN): 9.78%
  • CVS Caremark Corp (CVS): 6.36%
  • Lowe’s Companies Inc. (LOW): 5.68%
  • Costco Wholesale Corporation (COST): 5.13%
  • Target Corp (TGT): 4.78%
  • Walgreen Company (WAG): 4.31%
  • TJX Companies (TJX): 4.30%
  • McKesson, Inc. (MCK): 4.06%

RTH

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


PMR follows the Dynamic Retail Intellidex Index which is an “enhanced” index applying quantitative strategies to achieve outperformance compared to a more static index. The index evaluates companies based on fundamental growth, stock valuation, investment timeliness and risk factors. The fund was launched in October 2010. The expense ratio is .60%. AUM equal $38M and average daily trading volume is 34K shares. As of late January 2013 the annual dividend yield was .2.16% and YTD return 4.30%. The one year return was 16.35%.

Remember an ETF based on an enhanced index may outperform on the upside when markets are rising and underperform when markets and/or the category are under stress.

Data as of January 2013
PMR Top Ten Holdings & Weightings

  • Kroger Co (KR): 5.72%
  • Limited Brands, Inc. (LTD): 5.21%
  • Costco Wholesale Corporation (COST): 5.16%
  • CVS Caremark Corp (CVS): 4.96%
  • Wal-Mart Stores Inc (WMT): 4.82%
  • TJX Companies (TJX): 4.70%
  • Gap, Inc. (GPS): 4.67%
  • Ross Stores, Inc. (ROST): 3.99%
  • Amerco, Inc. (UHAL): 3.56%
  • Brown Shoe Company, Inc. (BWS): 3.36%

 

PMR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

RCD follows the same index as XLY but breaks the index into equal weightings. The fund was launched in November 2006. The expense ratio is .50%. AUM equal $45M and average daily trading volume is less than 5K shares. As of late January 2013 the annual dividend yield was 1.46% and YTD return 7.90%.  The one year return was 22.52%.

Data as of January 2013
RCD Top Ten Holdings & Weightings

  • Ford Motor Co (F): 1.38%
  • Delphi Automotive PLC (DLPH): 1.32%
  • CBS Corporation Class B (CBS): 1.30%
  • Johnson Controls Inc (JCI): 1.29%
  • BorgWarner Inc (BWA): 1.28%
  • Chipotle Mexican Grill, Inc. Class A (CMG): 1.27%
  • CarMax, Inc. (KMX): 1.27%
  • Goodyear Tire & Rubber Co (GT): 1.26%
  • Nike, Inc. Class B (NKE): 1.26%
  • Starwood Hotels & Resorts Worldwide Inc (HOT): 1.26%

RCD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


PSCD follows the S&P SmallCap 600 Consumer Discretionary Index which is comprised of common stocks of U.S. consumer discretionary companies that are principally engaged in the businesses of providing consumer goods and services that are cyclical in nature, including retail, automotive, leisure and recreation, media and real estate. The fund was launched April 2010. The expense ratio is .29%. AUM equal $67M and average daily trading volume is less than 10K shares. As of late January 2013 the annual dividend yield was 1.00% and YTD return 7.50%. The one year return was 22.30%.

Data as of January 2013
PSCD Top Ten Holdings & Weightings

  • Brunswick Corporation (BC): 3.01%
  • Wolverine World Wide (WWW): 2.77%
  • Pool Corp (POOL): 2.56%
  • Steven Madden (SHOO): 2.37%
  • Vitamin Shoppe, Inc. (VSI): 2.30%
  • Men’s Wearhouse (MW): 2.02%
  • Select Comfort Corporation (SCSS): 1.97%
  • Ryland Group, Inc. (RYL): 1.96%
  • Coinstar, Inc. (CSTR): 1.93%
  • Lumber Liquidators Holdings Inc (LL): 1.90%

 

PSCD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

CONCLUSION

The choices for investors interested in consumer or retail issues are similar but certainly can vary especially given different trading characteristics. For example, traders may wish to utilize more liquid issues for better trading efficiency. If an ETF index structure pleases you but volume is light consider use limit orders for any trading.

Our bias generally is to the more liquid issues unless we utilize them in Lazy portfolio approaches. Just always remember issuers issue and many times their interests aren’t aligned with yours. They primarily have a business interest and wish to have a competitive presence in any sector.

For further information about portfolio structures and more detailed technical information, including DeMark Indicators, using these or other ETFs see . If you wish to take advantage of gaining access to our technical indicators, portfolios and member commentary you may take advantage of a free 14-day trial .

The ETF Digest is long XLY and XRT as of the above date.

book_emailIn his newest book, , noted market commentator and ETF expert David Fry pinpoints the best ETFs across 26 subcategories in the U.S. Equities space. He also provides a bird’s eye view of where the markets are headed, as well as insights into his proven ETF-picking methodology. The book is available from amazon.com in Kindle format.

 

 

 

 

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Category: U.S. Equities

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