Top 10 Retail ETFs

NEW YORK ( TheStreet) -- Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication , and nearly 40 years in the investment business, we can help select those ETFs that matter and may or may not be repetitive. The result is a more manageable list of issues from which to view and make selections.

One strange thing you might discover is some popular ETFs have holdings and weightings which are surprising and not intuitive despite good looking charts. For many investors, knowing what you own or wish to own is important.

Retail and related consumer issues (excluding Consumer Staples) can offer dramatic examples of what's under the hood and perhaps offer some surprises.

Let's look at a variety of these ETFs with their top holdings and see if from a fundamental view they meet the test of what you think you'd find under the hood. Then we'll view current technical market conditions and trends as they apply to each.

ProShares and DirexionShares have leveraged long and inverse issues for those investors wishing to hedge or speculate.

RTH (Retail ML HOLDRs) is not an ETF but a trust and was launched in May 2001. A move is currently in progress for Van Eck to assume control of these issues and convert them to an ETF structure. This would most likely alter some of the holdings and methodologies. As a trust the constituents or holdings don't change, unless there's a buyout or other event changing the component, but weightings can change over time based on market prices. The holdings below make the most sense intuitively when you think retail. AUM (Assets under Management) equal $124M and average daily trading volume, 1M shares. As of mid-September 2011 the annual dividend was unavailable and YTD return was 1.46%.

RTH Top Ten Holdings & Weightings

Data as of September 2011
  1. Wal-Mart Stores, Inc. (WMT): 17.55%
  2. Home Depot, Inc. (HD): 14.11%
  3. Amazon.com, Inc. (AMZN): 11.84%
  4. Target Corporation (TGT): 7.54%
  5. Walgreen Company (WAG): 7.26%
  6. Lowe's Companies Inc. (LOW): 6.99%
  7. Costco Wholesale Corporation (COST): 5.55%
  8. TJX Companies (TJX): 4.64%
  9. CVS Caremark Corporation (CVS): 4.57%
  10. Gap, Inc. (GPS): 3.39%

XRT (SPDR Retail ETF) follows the S&P Retail Select Industry Index which is an equally weighted index. The fund was launched in June 2006. The expense ratio is .35%. AUM equal $480M and average daily trading volume is 11M shares. As of mid-September 2011 the annual dividend was $.22 making the current yield .58% and YTD return of 3.52%.

XRT Top Ten Holdings & Weightings

Data as of September 2011
  1. Shutterfly, Inc. (SFLY): 1.60%
  2. Supervalu Inc. (SVU): 1.56%
  3. Limited Brands, Inc. (LTD): 1.36%
  4. Gamestop Corporation A (GME): 1.36%
  5. Abercrombie & Fitch Company A (ANF): 1.35%
  6. Finish Line (FINL): 1.24%
  7. Priceline.com, Inc. (PCLN): 1.23%
  8. Buckle, Inc. (BKE): 1.23%
  9. Vitamin Shoppe, Inc. (VSI): 1.22%
  10. Amazon.com, Inc. (AMZN): 1.22%

XLY (SPDR Consumer Discretionary Sector ETF) follows the Consumer Discretionary Select Sector Index from that portion of the S&P 500 Index. The fund was launched in December 1998. The expense ratio is .20%. AUM equal is another popular issue which has $2B and average daily trading volume is 10M shares. As of mid-September 2011 the annual dividend was $.11 making the current yield .28% and YTD return was .96%.

XLY Top Ten Holdings & Weightings

Data as of September 2011
  1. Walt Disney Company (DIS): 6.19%
  2. McDonald's Corporation (MCD): 6.18%
  3. Comcast Corporation A (CMCSA): 5.51%
  4. Amazon.com, Inc. (AMZN): 5.30%
  5. Home Depot, Inc. (HD): 4.61%
  6. Ford Motor Co (F): 4.43%
  7. Time Warner, Inc. (TWX): 3.13%
  8. News Corporation A (NWSA): 3.08%
  9. Directv (DTV): 2.92%
  10. Lowe's Companies Inc. (LOW): 2.74%

VCR (Vanguard Consumer Discretionary ETF) follows the MSCI US Investable Market Consumer Discretionary 24/50 Index which consists of small, medium and large companies in the consumer discretionary sector. The index also includes automotive, household durable goods, textiles and apparel, and leisure equipment. Hotels, restaurants and of the leisure facilities and services are also included. The fund was launched in January 2004. The expense ratio is .25%. AUM equal $330M and average daily trading volume is 46K shares. As of mid-September 2011 the annual dividend was $.60 making the current yield 1.00% and YTD return of .23%.  

Data as of September 2011

VCR Top Ten Holdings & Weightings

  1. McDonald's Corporation (MCD): 5.10%
  2. Amazon.com Inc (AMZN): 4.28%
  3. The Walt Disney Co (DIS): 4.08%
  4. Home Depot, Inc. (HD): 3.44%
  5. Ford Motor Co (F): 2.82%
  6. Comcast Corp A (CMCSA): 2.73%
  7. DIRECTV (DTV): 2.33%
  8. Time Warner Inc (TWX): 2.31%
  9. News Corp A (NWSA): 2.01%
  10. Nike, Inc. B (NKE): 1.93%

 

RCD (Rydex S&P Equal-Weight Consumer Discretionary ETF) follows the same index as XLY but breaks the index into equal weightings. The fund was launched in November 2006. The expense ratio is .50%. AUM equal $22M and average daily trading volume is less than 10K shares. As of mid-September 2011 the annual dividend was $.21 making the current yield .67% and YTD return -1.44%.

Data as of September 2011

RCD Top Ten Holdings & Weightings

  1. AutoNation Inc (AN): 1.63%
  2. Wynn Resorts Ltd (WYNN): 1.57%
  3. Chipotle Mexican Grill, Inc. A (CMG): 1.54%
  4. Priceline.com, Inc. (PCLN): 1.53%
  5. Amazon.com Inc (AMZN): 1.53%
  6. VF Corporation (VFC): 1.50%
  7. Expedia, Inc. (EXPE): 1.48%
  8. Apollo Group Inc A (APOL): 1.47%
  9. Target Corp (TGT): 1.47%
  10. Ralph Lauren Corp (RL): 1.46%

 

IYC (iShares Dow Jones U.S. Consumer ETF) follows the Dow Jones U.S. Consumer Services Index. The fund was launched in June 2000. The expense ratio is .48%. AUM equal $200M and average daily trading volume is 50K shares. As of mid-September 2011 the annual dividend was $.25 making the current yield .65% and YTD of 2.23%.

Data as of September 2011

IYC Top Ten Holdings & Weightings
  1. Wal-Mart Stores, Inc. (WMT): 6.40%
  2. McDonald's Corporation (MCD): 4.71%
  3. Walt Disney Company (DIS): 4.41%
  4. Amazon.com, Inc. (AMZN): 3.99%
  5. Home Depot, Inc. (HD): 3.51%
  6. Comcast Corporation A (CMCSA): 3.11%
  7. CVS Caremark Corporation (CVS): 2.84%
  8. Time Warner, Inc. (TWX): 2.42%
  9. Directv (DTV): 2.33%
  10. Walgreen Company (WAG): 2.28%

FXD (First Trust Consumer Discretionary AlphaDex) follows the StrataQuant Consumer Discretionary Index which is considered an "enhanced" index. Various quantitative measures and inputs are analyzed and then constructed from the Russell 1000 Index to create the index constituents. The fund was launched in May 2007. The expense ratio is .70%. AUM of $400 and average daily trading volume is 466K shares. As of mid-September 2011 the annual dividend was unavailable and YTD return was -.05%. In May 2011 the YTD return was 10.62% pointing out how enhanced ETFs can outperform on the upside but underperform when markets are under stress.

 

Data as of September 2011

FXD Top Ten Holdings & Weightings
  1. Career Education Corporation (CECO): 1.52%
  2. Fossil, Inc. (FOSL): 1.51%
  3. Polaris Industries, Inc. (PII): 1.51%
  4. Gap, Inc. (GPS): 1.51%
  5. Tempur-Pedic International, Inc. (TPX): 1.51%
  6. DSW Inc (DSW): 1.49%
  7. RadioShack Corp (RSH): 1.48%
  8. AutoNation Inc (AN): 1.46%
  9. Sally Beauty Holdings Inc (SBH): 1.43%
  10. Garmin, Ltd. (GRMN): 1.40%

PMR (PowerShares Dynamic Retail ETF) follows the Dynamic Retail Intellidex Index which is an "enhanced" index applying quantitative strategies to achieve outperformance compared to a more static index. The index evaluates companies based on fundamental growth, stock valuation, investment timeliness and risk factors. The fund was launched in October 2010. The expense ratio is .60%. AUM equal $10M and average daily trading volume is less than 7K shares. As of mid-September 2011 the annual dividend was $.11 making the current yield .69% and YTD return of 5.45%.

Data as of September 2011

PMR Top Ten Holdings & Weightings

  1. Whole Foods Market, Inc. (WFM): 5.64%
  2. Netflix, Inc. (NFLX): 5.15%
  3. The Kroger Co (KR): 5.15%
  4. Macy's Inc (M): 5.11%
  5. Wal-Mart Stores Inc (WMT): 4.93%
  6. AutoZone Inc (AZO): 4.92%
  7. Costco Wholesale Corporation (COST): 4.91%
  8. Walgreen Company (WAG): 4.57%
  9. Pricesmart, Inc. (PSMT): 3.82%
  10. Ulta Salon Cosmetics & Fragrances, Inc. (ULTA): 3.18%

RXI (iShares S&P Global Consumer Discretionary ETF) follows the S&P Global Consumer Discretionary Index. The fund was launched in September 2006. The expense ratio is .48%. AUM equal $121M and average daily trading volume is 38K shares. As of mid-September 2011 the annual current dividend yield was 1.11% and YTD return was -5.30%. .

Data as of September 2011

RXI Top Ten Holdings & Weightings

  1. Toyota Motor Corporation (7203): 4.33%
  2. McDonald's Corporation (MCD): 4.18%
  3. Amazon.com Inc (AMZN): 3.51%
  4. The Walt Disney Co (DIS): 2.84%
  5. Comcast Corp A (CMCSA): 2.67%
  6. Honda Motor Company (7267): 2.40%
  7. Home Depot, Inc. (HD): 2.35%
  8. Daimler AG (DDAIF): 2.31%
  9. LVMH Moet Hennessy Louis Vuitton SA (MC): 2.01%
  10. Ford Motor Co (F): 1.97%

CHIQ (Global X China Consumer ETF) follows the Solactive China Consumer Index which is comprised of selected companies which have their main business operations in the consumer sector and are domiciled in China or have their main business operations in there. The fund was launched in November 2009. The expense ratio is .65%. AUM equal $164M and average daily trading volume is 113K shares. As of mid-September 2011 the annual dividend was $.19 makind the current yield 1.21% and YTD return of -12%.

Data as of September 2011

CHIQ Top Ten Holdings & Weightings

  1. GOME Electrical Appliances Holding Ltd. (GMELF): 6.34%
  2. Tingyi (Cayman Islands) Holding Corp. (TCYMF): 5.93%
  3. Dongfeng Motor Group Co Ltd (00489): 5.66%
  4. Hengan International Group Co., Ltd. (01044): 5.61%
  5. China Resources Enterprise Ltd. (00291): 5.28%
  6. Want Want China Holdings Limited (WWNTF): 5.04%
  7. New Oriental Education & Technology Group Inc. ADR (EDU): 4.95%
  8. Focus Media Holding, Ltd. ADR (FMCN): 4.92%
  9. Guangzhou Automobile Group Co., Ltd. (02238): 3.99%
  10. Air China Limited (00753): 3.53%

The choices for investors interested in retail issues are similar but certainly can vary especially given different trading characteristics. For example, traders may wish to utilize more liquid issues when moving in and out suits them.

Our bias generally is to the more liquid issues unless we utilize them in Lazy portfolio approaches. Just always remember issuers issue and many times their interests aren't aligned with yours. They primarily have a business interest and wish to have a competitive presence in any popular sector.

Internationally there is existing consumer or retail related issues available from Brazil and India which should attract investors given positive demographics particularly in the emerging market sector.

For further information about portfolio structures and more detailed technical information, including DeMark Indicators, using these or other ETFs see www.etfdigest.com .

You may address any feedback to: feedback@etfdigest.com

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The ETF Digest has no current positions in the featured securities.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.