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Consumers are feeling more optimistic about the economy with a wider reach of vaccination and reopening of the economy. Additionally, huge infrastructure spending package and expanded stimulus are acting as a huge catalyst for consumers to spend higher, resulting in an increase in retail sales. Notably, consumer spending accounts for more than two-thirds of U.S. economic activity.
The National Retail Federation (“NRF”) boosted the retail sales forecast for this year, citing a quicker-than-expected recovery and eagerness to shop. The agency projects retail sales to grow 10.5-13.5% to $4.44-$4.56 trillion, up from the previous forecast of 6.5-8.2% growth made in February. Online and non-store sales are expected to grow 18-23% to $1.09-$1.13 trillion as consumers keep using e-commerce. The outlook is based on the 7% GDP growth projection for this year, which represents the fastest growth since 1984 (read: Consumer Discretionary ETFs to Shine as US Economy Reopens).
E-commerce growth surged 39% to $196.7 billion in the first quarter of this year. The growth rate is nearly triple the 13.8% increase registered in Q1 2020. Per the latest data from eMarketer, retail U.S. e-commerce sales is expected to grow 17.9% to $933.3 billion. This is lower than last year's 18% growth but exceeds pre-pandemic estimates of 12.8%. Apparel and accessories sales will be the largest gainer with 28.7% growth, followed by furniture and home furnishings (11.4%), and office equipment and supplies (9.3%).
Given the strong trends, investors should bet on the following retail ETFs to tap the sales boom. We have presented them below:
This ETF has attracted $1.3 billion to its asset base and offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund is home to 73 stocks, each accounting for less than 2.6% of the assets. IBUY charges 65 bps in annual fees.
This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 26 stocks in its basket with the highest concentration on the top firm — Amazon (AMZN - Free Report) . American firms make up three-fourth of the portfolio, while China accounts for 18.2% share. ONLN has accumulated $1.1 billion in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 83,000 shares (read: ETFs in Focus as Amazon Agrees to Buy MGM Studio).
With AUM of $879.3 million, this product tracks the S&P Retail Select Industry Index, holding 101 securities in its basket with each accounting for no more than 1.9% of assets. Internet & direct marketing retail, apparel retail, automotive retail and specialty stores are the top four sectors with a double-digit allocation each. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 4 ETFs & Stocks to Buy This Summer From Top Sectors).
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. It is highly concentrated on the top three firms with a combined 40.6% share. The product has amassed $225.8 million in its asset base and charges 35 bps in annual fees. RTH has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 50 stocks in its basket. It is concentrated on the top firm GameStop (GME - Free Report) at 13.3% while the other firms account for no more than 7.4% of the basket. Specialty retailers takes the largest share at 40.4% share followed by diversified retailers (22%) and drug retailers (13.5%). FTXD has accumulated $12.3 million in its asset base and has an expense ratio of 0.60%. The ETF carries a Zacks ETF Rank #3.
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ETFs to Buy on Strong 2021 Retail Sales Outlook
Consumers are feeling more optimistic about the economy with a wider reach of vaccination and reopening of the economy. Additionally, huge infrastructure spending package and expanded stimulus are acting as a huge catalyst for consumers to spend higher, resulting in an increase in retail sales. Notably, consumer spending accounts for more than two-thirds of U.S. economic activity.
The National Retail Federation (“NRF”) boosted the retail sales forecast for this year, citing a quicker-than-expected recovery and eagerness to shop. The agency projects retail sales to grow 10.5-13.5% to $4.44-$4.56 trillion, up from the previous forecast of 6.5-8.2% growth made in February. Online and non-store sales are expected to grow 18-23% to $1.09-$1.13 trillion as consumers keep using e-commerce. The outlook is based on the 7% GDP growth projection for this year, which represents the fastest growth since 1984 (read: Consumer Discretionary ETFs to Shine as US Economy Reopens).
E-commerce growth surged 39% to $196.7 billion in the first quarter of this year. The growth rate is nearly triple the 13.8% increase registered in Q1 2020. Per the latest data from eMarketer, retail U.S. e-commerce sales is expected to grow 17.9% to $933.3 billion. This is lower than last year's 18% growth but exceeds pre-pandemic estimates of 12.8%. Apparel and accessories sales will be the largest gainer with 28.7% growth, followed by furniture and home furnishings (11.4%), and office equipment and supplies (9.3%).
Given the strong trends, investors should bet on the following retail ETFs to tap the sales boom. We have presented them below:
Amplify Online Retail ETF (IBUY - Free Report)
This ETF has attracted $1.3 billion to its asset base and offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund is home to 73 stocks, each accounting for less than 2.6% of the assets. IBUY charges 65 bps in annual fees.
ProShares Online Retail ETF (ONLN - Free Report)
This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 26 stocks in its basket with the highest concentration on the top firm — Amazon (AMZN - Free Report) . American firms make up three-fourth of the portfolio, while China accounts for 18.2% share. ONLN has accumulated $1.1 billion in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 83,000 shares (read: ETFs in Focus as Amazon Agrees to Buy MGM Studio).
SPDR S&P Retail ETF (XRT - Free Report)
With AUM of $879.3 million, this product tracks the S&P Retail Select Industry Index, holding 101 securities in its basket with each accounting for no more than 1.9% of assets. Internet & direct marketing retail, apparel retail, automotive retail and specialty stores are the top four sectors with a double-digit allocation each. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 4 ETFs & Stocks to Buy This Summer From Top Sectors).
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. It is highly concentrated on the top three firms with a combined 40.6% share. The product has amassed $225.8 million in its asset base and charges 35 bps in annual fees. RTH has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 50 stocks in its basket. It is concentrated on the top firm GameStop (GME - Free Report) at 13.3% while the other firms account for no more than 7.4% of the basket. Specialty retailers takes the largest share at 40.4% share followed by diversified retailers (22%) and drug retailers (13.5%). FTXD has accumulated $12.3 million in its asset base and has an expense ratio of 0.60%. The ETF carries a Zacks ETF Rank #3.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>