Here's How To Play Retail ETFs This Holiday Season

If there is one sector that always shines during holiday season its retail and what better way to play the sector than betting on the sector ETFs. However, not all retail ETFs are the same, some put equal money in all the stocks while others use market cap or specialization as their barometer. So, how should an investor play the retail ETFs and which ones to choose?

Bloomberg’s Eric Balchunas recently decoded the mystery behind some of the retail ETFs and also suggested strategies for investors to pick one.

“I think a lot of investors have gotten in early, before right, if you look back the retail ETF’s, it’s a mixed bag, during the shopping season, which is between say thanksgiving and Christmas, they always don’t outperform, in fact they normally underperform the market a bit so it’s tough to play it, but this year does looks good.”

“If you look at XRT which is the big one people use, it’s the SPDR S&P Retail (ETF) XRT, this one is up 9% in the past month, it’s also playing a little catch up, it was down 2% up to that point this year, severely lagging S&P, it’s also taken $100 or $200 million in the past week, that’s a good sign that investors are getting into it […]”

Balchunas highlighted how the SPDR S&P Retail (ETF) is an equal weighted ETF, which makes it quite volatile and also not suitable for a lot of investors.

“If you don’t want to stomach that kind of ride and you want to go for some of the bigger retailers, RTH, which is the Market Vectors Retail ETFRTH is definitely the one for you […]”