Exchange Traded Funds (ETFs)

Shopping for a Broad-based Retail ETF?

The SPDR S&P Retail ETF (NYSEARCA:XRT) tracks a broad-based, equal-weighted index of stocks in the U.S. retail industry.

XRT uses equal weighting rather than market-cap weighting to make radical differences in exposure and performance compared to its peers. The effect of equal weighting in XRT is keener than some other equal-weighted funds because it draws retail stocks, as defined by GICS, from the broad S&P Total Market Index that includes equities of any market capitalization.

The result is that XRT has greater micro- and small-cap exposure. The fund holds retail companies that stretch across multiple sub-industries such as apparel, automotive, computers and electronics, department stores, drugs, food, general merchandise stores, hypermarkets and super centers, internet and direct marketing retail, and specialty stores. The index is rebalanced quarterly.

Source: StockCharts.com

The fund has $971 million in net assets and a 0.02% average spread. Its expense ratio is 0.35%, meaning it is relatively inexpensive to hold in comparison to other exchange-traded funds. XRT’s share price, as of mid-December 2021, is just under $90, giving it a 0.68% distribution yield.

The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index derived from the retail segment of a U.S. total market composite index. In seeking to track the performance of the S&P Retail Select Industry Index, the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index.

If this checks all the boxes an investor is looking for, then this could be a good investment. However, as with any opportunity, I urge all interested parties to exercise their own due diligence in deciding whether this fund fits their own individual investment and portfolio goals.

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As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.