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Widespread vaccination,reopening of the economy and a summer season making Americans feel more optimistic about the economy and leading them to splurge in buying things. Additionally, huge infrastructure spending package and expanded stimulus are acting as a huge catalyst for consumers to spend higher.
Transaction volumes on customers’ credit and debit cards and over the Zelle payment network have grown by 20% so far in 2021 compared to this point in 2019, per the Bank of America (which is the second-biggest U.S. bank) CEO Brian Moynihan, as quoted on CNBC. Considering the comparison with 2020 is out-of-the-box as most part of the year was laden with full-fledged lockdown.
“People got a lot of stimulus money and they’ve been spending it,” Moynihan said. “The unemployment rate is coming down and people are going back to work. People can go to amusement parks, they can go on an inside-the-U.S. trip, they can go out to eat,” said the Bank of America CEO.
Nearly all spending categories have recovered apart from travel, which is still 15% down from 2019, Moynihan said. Stimulus checks and bolstered unemployment benefits have pumped up customers’ checking accounts, Moynihan said. Accounts with about $1,000 to $2,000 in average balances are “up 6 to 7 times what they were before the pandemic,” he said (read: Retail ETFs in Focus Post Q1 Earnings).
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. American firms make up three-fourth of the portfolio. ONLN has accumulated $1.1 billion in its asset base and charges 58 bps in annual fees.
With AUM of $885.8 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. Specialty retailers takes the largest share at 40.4% share followed by diversified retailers (22%) and drug retailers (13.5%). FTXD has accumulated $11.7 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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Here's Why Retail ETFs Are Good Picks Right Now
Widespread vaccination,reopening of the economy and a summer season making Americans feel more optimistic about the economy and leading them to splurge in buying things. Additionally, huge infrastructure spending package and expanded stimulus are acting as a huge catalyst for consumers to spend higher.
Transaction volumes on customers’ credit and debit cards and over the Zelle payment network have grown by 20% so far in 2021 compared to this point in 2019, per the Bank of America (which is the second-biggest U.S. bank) CEO Brian Moynihan, as quoted on CNBC. Considering the comparison with 2020 is out-of-the-box as most part of the year was laden with full-fledged lockdown.
“People got a lot of stimulus money and they’ve been spending it,” Moynihan said. “The unemployment rate is coming down and people are going back to work. People can go to amusement parks, they can go on an inside-the-U.S. trip, they can go out to eat,” said the Bank of America CEO.
Nearly all spending categories have recovered apart from travel, which is still 15% down from 2019, Moynihan said. Stimulus checks and bolstered unemployment benefits have pumped up customers’ checking accounts, Moynihan said. Accounts with about $1,000 to $2,000 in average balances are “up 6 to 7 times what they were before the pandemic,” he said (read: Retail ETFs in Focus Post Q1 Earnings).
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. American firms make up three-fourth of the portfolio. ONLN has accumulated $1.1 billion in its asset base and charges 58 bps in annual fees.
SPDR S&P Retail ETF (XRT - Free Report)
With AUM of $885.8 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. Specialty retailers takes the largest share at 40.4% share followed by diversified retailers (22%) and drug retailers (13.5%). FTXD has accumulated $11.7 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 >>