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Time to Tap Retail ETFs Despite High Rates & Inflation?
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The U.S. retail industry plays an important role in the functioning of the economy. Robust consumer spending and rapid expansion of e-commerce have fueled the upward trajectory of the sector in recent months, showcasing steady growth.
Performance of the U.S. Retail Market
According to an article on CNN, a notable increase in spending by U.S. retailers was witnessed in May, indicating the ongoing support from the consumer to boost the economy. According to the Commerce Department's report, retail sales experienced 0.3% growth in May compared to April. The growth in May surpassed economists' forecasts of a 0.1% decline, as per Refinitiv.
Spending increased across all categories, with the exception of gas stations and other stores. The fact that the retail sales report came in better than predicted adds to the fact that American consumers are not yet prepared to cut back on their spending.
Any Possible Headwinds?
Economists anticipate that the winning trend of retail sales may eventually reverse. People are likely to be burdened by the predicted increase in interest rates and stricter credit requirements as they deplete their savings and take on more debt
According to the latest Summary of Economic Projections released by the Federal Reserve, officials anticipate a decline in economic output for 2023 compared to the previous year. The economy is expected to face difficulties from stern credit conditions, which could apply downward pressure on economic output and inflation.
While retail sales demonstrated resilience in May, spending has been relatively subdued since experiencing a significant surge in January. Companies in white-collar industries continue to downsize their workforce, posing potential implications for consumer spending.
Quantifying the Retail Landscape
As per invezz, the global retail market is poised to surpass $30 trillion by 2024, currently worth more than $27 trillion. The United States retains its position as the largest global market in terms of retail sales, with a value exceeding $7.0 trillion in 2022, significantly surpassing China's approximately $2.0 trillion.
Social media has become a prevalent avenue for customer service within the U.S. retail industry. Around 67% of U.S. consumers utilize social media to connect with retailers, seeking information or resolving concerns.
Walmart Inc. (WMT - Free Report) stands as the world's leading retailer in terms of total sales, recording $611 billion in sales in fiscal 2023, marking 6.7% year-over-year growth. Projections anticipate a continued upward trajectory, with consolidated net sales expected to reach $633 billion in fiscal 2024.
How Can Artificial Intelligence Boost Retail?
According to openpr, the introduction of artificial intelligence (AI) is causing a dramatic revolution in the worldwide retail sector. In the retail market, AI is predicted to witness an astonishing CAGR of 30.3%, exceeding the US$ 6 billion milestone recorded in 2023, and reaching a valuation of US$ 85 billion by 2033.
With the help of technology breakthroughs, the retail industry has embraced digital transformation and is bringing about substantial changes. Retail firms automate and improve repetitive tasks with AI adoption, resulting in quicker decision-making based on cognitive insights.
ETFs in Focus
Given this background, we will now focus on some noteworthy retail ETFs.
The SPDR S&P Retail ETF seeks to replicate the performance of the S&P Retail Select Industry Index. With a basket of 80 securities and an asset base of $309.71 million, the fund charges an annual fee of 0.35%.
SPDR S&P Retail ETF has a Zacks ETF Rank #1 (Strong Buy) and a Medium risk outlook. The fund has generated 3.36% year to date and 3.42% in the last three months.
The Amplify Online Retail ETF provides a cost-efficient way for investors to own a basket of companies with significant revenues from online and virtual retail sales. It tracks the EQM Online Retail Index. IBUY commands an asset base of $180.40 million and has a basket of 61 securities. The fund charges an annual fee of 0.65%.
Amplify Online Retail ETF has major allocations to the United States (71%), followed by China (9%) and Germany (4%). IBUY has earned 12.72% year to date and 5.48% in the last three months.
The VanEck Retail ETF replicates as closely as possible the performance of MVIS US Listed Retail 25 Index. The fund has amassed an asset base of $150.49 and charges an annual fee of 0.35%.
The fund has major allocations to Amazon.com (AMZN - Free Report) , Home Depot (HD - Free Report) and Walmart, with a share of 20.29%, 9.04% and 8.44%, respectively. VanEck Retail ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. It has generated 8.65% year to date and 10.25% in the last three months.
The First Trust S-Network E-Commerce ETF seeks to track the performance of the S-Network Global E-Commerce Index, with exposure to companies with securities listed on recognized global securities exchanges that are principally engaged in the global e-commerce industry, including the online retail, online marketplace, content navigation and e-commerce infrastructure business segments.
The fund has an asset base of $5.33 million and a basket of 61 securities. ISHP charges an annual fee of 0.60%. It has major allocations to the United States (49.79%) and China (16.49%).
First Trust S-Network E-Commerce ETF has a Zacks ETF Rank #3, adding 9.4% year to date and 0.58% in the last three months.
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Time to Tap Retail ETFs Despite High Rates & Inflation?
The U.S. retail industry plays an important role in the functioning of the economy. Robust consumer spending and rapid expansion of e-commerce have fueled the upward trajectory of the sector in recent months, showcasing steady growth.
Performance of the U.S. Retail Market
According to an article on CNN, a notable increase in spending by U.S. retailers was witnessed in May, indicating the ongoing support from the consumer to boost the economy. According to the Commerce Department's report, retail sales experienced 0.3% growth in May compared to April. The growth in May surpassed economists' forecasts of a 0.1% decline, as per Refinitiv.
Spending increased across all categories, with the exception of gas stations and other stores. The fact that the retail sales report came in better than predicted adds to the fact that American consumers are not yet prepared to cut back on their spending.
Any Possible Headwinds?
Economists anticipate that the winning trend of retail sales may eventually reverse. People are likely to be burdened by the predicted increase in interest rates and stricter credit requirements as they deplete their savings and take on more debt
According to the latest Summary of Economic Projections released by the Federal Reserve, officials anticipate a decline in economic output for 2023 compared to the previous year. The economy is expected to face difficulties from stern credit conditions, which could apply downward pressure on economic output and inflation.
While retail sales demonstrated resilience in May, spending has been relatively subdued since experiencing a significant surge in January. Companies in white-collar industries continue to downsize their workforce, posing potential implications for consumer spending.
Quantifying the Retail Landscape
As per invezz, the global retail market is poised to surpass $30 trillion by 2024, currently worth more than $27 trillion. The United States retains its position as the largest global market in terms of retail sales, with a value exceeding $7.0 trillion in 2022, significantly surpassing China's approximately $2.0 trillion.
Social media has become a prevalent avenue for customer service within the U.S. retail industry. Around 67% of U.S. consumers utilize social media to connect with retailers, seeking information or resolving concerns.
Walmart Inc. (WMT - Free Report) stands as the world's leading retailer in terms of total sales, recording $611 billion in sales in fiscal 2023, marking 6.7% year-over-year growth. Projections anticipate a continued upward trajectory, with consolidated net sales expected to reach $633 billion in fiscal 2024.
How Can Artificial Intelligence Boost Retail?
According to openpr, the introduction of artificial intelligence (AI) is causing a dramatic revolution in the worldwide retail sector. In the retail market, AI is predicted to witness an astonishing CAGR of 30.3%, exceeding the US$ 6 billion milestone recorded in 2023, and reaching a valuation of US$ 85 billion by 2033.
With the help of technology breakthroughs, the retail industry has embraced digital transformation and is bringing about substantial changes. Retail firms automate and improve repetitive tasks with AI adoption, resulting in quicker decision-making based on cognitive insights.
ETFs in Focus
Given this background, we will now focus on some noteworthy retail ETFs.
SPDR S&P Retail ETF (XRT - Free Report)
The SPDR S&P Retail ETF seeks to replicate the performance of the S&P Retail Select Industry Index. With a basket of 80 securities and an asset base of $309.71 million, the fund charges an annual fee of 0.35%.
SPDR S&P Retail ETF has a Zacks ETF Rank #1 (Strong Buy) and a Medium risk outlook. The fund has generated 3.36% year to date and 3.42% in the last three months.
Amplify Online Retail ETF (IBUY - Free Report)
The Amplify Online Retail ETF provides a cost-efficient way for investors to own a basket of companies with significant revenues from online and virtual retail sales. It tracks the EQM Online Retail Index. IBUY commands an asset base of $180.40 million and has a basket of 61 securities. The fund charges an annual fee of 0.65%.
Amplify Online Retail ETF has major allocations to the United States (71%), followed by China (9%) and Germany (4%). IBUY has earned 12.72% year to date and 5.48% in the last three months.
VanEck Retail ETF (RTH - Free Report)
The VanEck Retail ETF replicates as closely as possible the performance of MVIS US Listed Retail 25 Index. The fund has amassed an asset base of $150.49 and charges an annual fee of 0.35%.
The fund has major allocations to Amazon.com (AMZN - Free Report) , Home Depot (HD - Free Report) and Walmart, with a share of 20.29%, 9.04% and 8.44%, respectively. VanEck Retail ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. It has generated 8.65% year to date and 10.25% in the last three months.
First Trust S-Network E-Commerce ETF (ISHP - Free Report)
The First Trust S-Network E-Commerce ETF seeks to track the performance of the S-Network Global E-Commerce Index, with exposure to companies with securities listed on recognized global securities exchanges that are principally engaged in the global e-commerce industry, including the online retail, online marketplace, content navigation and e-commerce infrastructure business segments.
The fund has an asset base of $5.33 million and a basket of 61 securities. ISHP charges an annual fee of 0.60%. It has major allocations to the United States (49.79%) and China (16.49%).
First Trust S-Network E-Commerce ETF has a Zacks ETF Rank #3, adding 9.4% year to date and 0.58% in the last three months.