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Valentine's Day Spending to Hit Second Highest: ETFs to Splurge
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Higher prices can’t keep Americans away from spending money and effort on those they care for the most this Valentine’s Day. This is especially true as Americans are expected to shell out $25.9 billion on Valentine’s Day this year, up from $23.9 billion in 2022 and one of the highest spending on record, according to the National Retail Federation (“NRF”).
Given this, those seeking to capitalize on the Valentine’s Day splurge should invest in consumer discretionary and retail ETFs. We have highlighted five excellent picks having a Zacks ETF Rank #2 (Buy). These include Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) , iShares U.S. Consumer Services ETF (IYC - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , and VanEck Vectors Retail ETF (RTH - Free Report) .
More than half of consumers plan to celebrate and spend an average of $192.80. This is up from $175.41 in 2022, and the second-highest since NRF started tracking Valentine’s Day spending in 2004. The top gifts include candy at 57%, greeting cards at 40%, flowers at 37%, an evening out at 32% and jewelry at 21%. Americans plan to spend more than $5.5 billion on jewelry and nearly $4.4 billion on an evening out.
Similar to recent years, the top shopping destination is online (35%), closely followed by department stores (34%), discount stores (31%) and specialty stores (18%).
Higher spending is expected to have a positive impact on the consumer discretionary sector, which attracts major consumer spending. It will also help in driving economic growth, which has been resilient. Though the pace of growth momentum has slowed in recent months due to stubborn inflation, rising interest rates, and battered financial markets, the U.S. economy expanded 2.1% annually in 2022. This is down from annual growth of 5.9% recorded in 2021 — the fastest rate since 1984 (read: 4 ETFs to Tap on Solid Q4 GDP Numbers).
Jobs growth has also slowed in recent months. The world’s second-largest economy added 4.5 million jobs, the second-strongest year on record, and the unemployment rate fell to 3.5%, matching a 50-year low. Additionally, Americans have been regaining confidence in the U.S. economy, with consumer sentiment jumping to its highest level in 13 months, per the latest University of Michigan's consumer survey.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 56 securities in its basket, with key holdings in Internet & direct marketing retail, specialty retail, hotels, restaurants and leisure, and automobiles with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $14.7 billion and an average daily volume of around 4.6 million shares. It charges 0.10% in expense ratio.
Invesco S&P SmallCap Consumer Discretionary ETF targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 86 securities in its basket, with specialty retail taking the largest share at 36.8%, while household durables, and hotels, restaurants and leisure account for double-digit exposure each (read: 5 Small-Cap ETFs Outperforming Russell 2000).
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $26.1 million in AUM and charges 30 bps in annual fees. It trades in an average daily volume of about 2,000 shares.
iShares U.S. Consumer Discretionary ETF offers exposure to U.S. companies that distribute food, drugs, general retail items and media by tracking the Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index. It holds 173 stocks in its basket, with key holdings in retailing, consumer services, media & entertainment, and autos & components.
iShares U.S. Consumer Discretionary ETF has amassed $763.1 million in its asset base, and trades in a moderate volume of 97,000 shares a day on average. It charges 39 bps in annual fees from investors.
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well diversified 94 stocks in its basket. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in automotive retail, apparel retail, specialty stores and Internet & direct marketing retail.
SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $474.2 million and an average trading volume of 4.7 million shares. It charges 35 bps in annual fees (read: 5 Top-Ranked ETFs Beating the Market at Midway Q1).
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with double-digit exposure, while the other firms hold no more than 7.8% share.
VanEck Vectors Retail ETF has amassed $153.3 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 7,000 shares a day on average.
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Valentine's Day Spending to Hit Second Highest: ETFs to Splurge
Higher prices can’t keep Americans away from spending money and effort on those they care for the most this Valentine’s Day. This is especially true as Americans are expected to shell out $25.9 billion on Valentine’s Day this year, up from $23.9 billion in 2022 and one of the highest spending on record, according to the National Retail Federation (“NRF”).
Given this, those seeking to capitalize on the Valentine’s Day splurge should invest in consumer discretionary and retail ETFs. We have highlighted five excellent picks having a Zacks ETF Rank #2 (Buy). These include Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) , iShares U.S. Consumer Services ETF (IYC - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , and VanEck Vectors Retail ETF (RTH - Free Report) .
More than half of consumers plan to celebrate and spend an average of $192.80. This is up from $175.41 in 2022, and the second-highest since NRF started tracking Valentine’s Day spending in 2004. The top gifts include candy at 57%, greeting cards at 40%, flowers at 37%, an evening out at 32% and jewelry at 21%. Americans plan to spend more than $5.5 billion on jewelry and nearly $4.4 billion on an evening out.
Similar to recent years, the top shopping destination is online (35%), closely followed by department stores (34%), discount stores (31%) and specialty stores (18%).
Higher spending is expected to have a positive impact on the consumer discretionary sector, which attracts major consumer spending. It will also help in driving economic growth, which has been resilient. Though the pace of growth momentum has slowed in recent months due to stubborn inflation, rising interest rates, and battered financial markets, the U.S. economy expanded 2.1% annually in 2022. This is down from annual growth of 5.9% recorded in 2021 — the fastest rate since 1984 (read: 4 ETFs to Tap on Solid Q4 GDP Numbers).
Jobs growth has also slowed in recent months. The world’s second-largest economy added 4.5 million jobs, the second-strongest year on record, and the unemployment rate fell to 3.5%, matching a 50-year low. Additionally, Americans have been regaining confidence in the U.S. economy, with consumer sentiment jumping to its highest level in 13 months, per the latest University of Michigan's consumer survey.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 56 securities in its basket, with key holdings in Internet & direct marketing retail, specialty retail, hotels, restaurants and leisure, and automobiles with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $14.7 billion and an average daily volume of around 4.6 million shares. It charges 0.10% in expense ratio.
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report)
Invesco S&P SmallCap Consumer Discretionary ETF targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 86 securities in its basket, with specialty retail taking the largest share at 36.8%, while household durables, and hotels, restaurants and leisure account for double-digit exposure each (read: 5 Small-Cap ETFs Outperforming Russell 2000).
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $26.1 million in AUM and charges 30 bps in annual fees. It trades in an average daily volume of about 2,000 shares.
iShares U.S. Consumer Services ETF (IYC - Free Report)
iShares U.S. Consumer Discretionary ETF offers exposure to U.S. companies that distribute food, drugs, general retail items and media by tracking the Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index. It holds 173 stocks in its basket, with key holdings in retailing, consumer services, media & entertainment, and autos & components.
iShares U.S. Consumer Discretionary ETF has amassed $763.1 million in its asset base, and trades in a moderate volume of 97,000 shares a day on average. It charges 39 bps in annual fees from investors.
SPDR S&P Retail ETF (XRT - Free Report)
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well diversified 94 stocks in its basket. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in automotive retail, apparel retail, specialty stores and Internet & direct marketing retail.
SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $474.2 million and an average trading volume of 4.7 million shares. It charges 35 bps in annual fees (read: 5 Top-Ranked ETFs Beating the Market at Midway Q1).
VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with double-digit exposure, while the other firms hold no more than 7.8% share.
VanEck Vectors Retail ETF has amassed $153.3 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 7,000 shares a day on average.