Retail ETFs Hitting Highs Ahead Of Holidays

The retail sector is on fire with many of its biggest names trading at or near new yearly highs.

Heading into the most lucrative part of the year for retailers, they will be looking to make the most of this holiday season and end 2014 with a bang.

The surge by a large number of retailers could be attributed to the increased discretionary income available to American families.

It appears that many of those families are using their excess discretionary income at their local Wal-Mart Stores, Inc. WMT, Costco Wholesale Corporation COST and a number of other retailers.

Since October 16, Wal-Mart is up 7 percent, Costco is up 12 percent (as well as sitting at an all-time high) and Target Corporation TGT is up 12 percent. Macy’s, Inc. M and TJX Companies Inc TJX are experiencing a very similar surge as well.

Highlighted below are two retail ETFs that will be affected by the solid performance in the retail sector.

Related Link: Wal-Mart Earnings Preview: Calm Before The Holiday Shopping Season Storm?

XLY

The Consumer Discretionary Select Sector SPDR Fund XLY tracks 86 companies that are considered to be in the consumer discretionary sector. The top four individual holdings include:

• Walt Disney Co DIS at 6.7 percent
• Comcast Corporation CMCSA making up 6.5
• Home Depot, Inc. HD with a 6.3 percent holding
• Amazon.com, Inc. AMZN coming in at 5.6 percent

The ETF is up 8 percent over the last 12 months and 6 percent over the last six months. XLY has an expense ratio of 0.16 percent. The solid performance by XLY going into the holiday season is promising news for all retailers. With many American consumers strapped with more discretionary income than they’ve had in years, retailers are looking to make this a lucrative holiday season.

RTH

The Market Vectors Retail ETF RTH follows 26 of the largest companies in the retail industry. The top four holdings include:

• Wal-Mart making up 10.5 percent
• Amazon at 9.2 percent
• Home Depot at 8 percent
• CVS Health Corp CVS at 7.5 percent

RTH has performed very well up 12 percent over the last 12 months and 14 percent over the last six months. The retail ETF is currently sitting at an all-time high and is up 11 straight sessions. The ETF has an expense ratio of 0.35 percent.

Consumer confidence has definitely been tested this year, and it is a very positive sign for the retailers that consumers are willing to spend their discretionary income and appear to be more optimistic heading into the holiday season.