Retail ETFs are Looking Good Bets: Let's Explore Why
Zacks Investment Research | Sep 21, 2021 04:00AM ET
The month of September remained weak, living up to its reputation of a seasonally weak period for the Wall Street. The Dow Jones Industrial Average has lost 3.9% in the month so far. The S&P 500 and the Nasdaq composite also decreased 3.7% and 3.6%, respectively, in the same month.
There are certain factors like the Federal Reserve’s chances of tapering the fiscal stimulus support, rising inflationary levels, possibilities of a tax hike, spike in the coronavirus cases and China property market concerns that caused uncertainty in the investing world. Amid the current market environment, investors looking to park their money to likely rake in some good returns can consider the retail sector.
The latest retail sales data pleasantly surprised investors. The metric inched up 0.7% sequentially in August 2021 against the market expectations of a 0.8% decline, per a CNBC article. Online retail sales rose 5.3% last month after dipping 4.6% in July, per a Reuters article. There was an increase in the sales at clothing stores as well as for the building material and furniture in the previous month. Encouragingly, the core retail sales rebounded 2.5% in August from a downward revision of 1.9% in July, according to the Reuters article. The metric highlights the spending component of GDP.
The U.S. consumer sentiment also marginally improved despite the growing concerns about the surging coronavirus cases and the rising inflationary levels. The University of Michigan’s preliminary consumer sentiment inched up to 71 in September from 70.3 last month, per a BloombergQuint article.
Market analysts are expecting an impressive retail sales figure in 2021 along with a strong holiday season. The strength in consumer sentiment can be the major driving force as the same is believed to be prepared with enough resources to splurge this holiday season after facing restrictions for more than a year.
The retailers are prepping for the start to the holiday season (the late October-December period) that is considered a busy season for many industry players and market participants. The quarter is also marked by some popular retail events like Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas, which increase its significance among retailers.
According to Mastercard (NYSE:MA) SpendingPulse, FTXD
The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. Specialty retailers take the largest share at 39.6% share followed by diversified retailers (26%) and apparel retailers (8.8%). FTXD accumulated $24.9 million in its asset base and has an expense ratio of 0.60%.
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