Designed to provide broad exposure to the Consumer Discretionary - Retail segment of the equity market, the SPDR S&P Retail ETF (XRT - Free Report) is a passively managed exchange traded fund launched on 06/19/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Retail is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $343.77 M, making it one of the larger ETFs attempting to match the performance of the Consumer Discretionary - Retail segment of the equity market. XRT seeks to match the performance of the S&P Retail Select Industry Index before fees and expenses.
The S&P Retail Select Industry Index represents the retail sub-industry portion of the S&P TMI. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Retail Index is a modified equal weight index.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.20%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 85% of the portfolio, followed by Consumer Staples.
Looking at individual holdings, Rite Aid Corporation (RAD - Free Report) accounts for about 2.43% of total assets, followed by L Brands Inc. (LB - Free Report) and Signet Jewelers Limited (SIG - Free Report) .
The top 10 holdings account for about 16.30% of total assets under management.
Performance and Risk
The ETF has lost about -28.84% so far this year and is down about -26.23% in the last one year (as of 03/16/2020). In that past 52-week period, it has traded between $30.66 and $46.24.
The ETF has a beta of 1 and standard deviation of 20.16% for the trailing three-year period, making it a medium risk choice in the space. With about 89 holdings, it effectively diversifies company-specific risk.
SPDR S&P Retail ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XRT is an outstanding option for investors seeking exposure to the Consumer Discretionary ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
VanEck Vectors Retail ETF (RTH - Free Report) tracks MVIS US Listed Retail 25 Index and the Amplify Online Retail ETF (IBUY - Free Report) tracks EQM Online Retail Index. VanEck Vectors Retail ETF has $71.76 M in assets, Amplify Online Retail ETF has $179.69 M. RTH has an expense ratio of 0.35% and IBUY charges 0.65%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.