Consumer Spending Not Hurting Retail ETFs

Huge expectations for last year's holiday season had many of the country's largest retailers trading near all-time highs in late 2014. After disappointing holiday sales numbers and a brutal winter, U.S. retail sales fell in February for the third month in a row.

The Commerce Department reports that retail sales fell by 0.6 percent in February, following a decline of 0.8 percent in January and 0.9 percent in December. The numbers were a surprise to most analysts that predicted a rise in employment and foresaw lower gas prices boosting spending.

The Retail Situation

However, not all retailers have been feeling the effects of slowing retail sales. Discount stores such as Burlington Stores Inc BURL, Dollar Tree Inc. DLTR and Target Corporation TGT are trading near all-time highs.

Additionally, not all retailers are joining the rally, as Wal-Mart Stores, Inc. WMT and Macy's, Inc. M have pulled back after hitting new highs in early January.

Furthermore, luxury retailers have not experienced the same residual pressures of the financial crisis and have likewise enjoyed a strong spending season.

Related Link: 7 Stocks Maxim Is Watching In Retail

What's Gas Have To Do With Retail?

Rather than spending the billions in savings from a drop in gasoline prices, many Americans have decided to save first and spend second. The spending they are participating in appears to have been at the lower-end retailers, such as the names mentioned above.

Regardless of the spending numbers, the bottom line is that retail stocks as a whole have been strong, with the S&P Retail Index hitting a new all-time high this week.

Highlighted below are two retail ETFs that encompass both the discount and luxury names.

SPDR S&P Retail ETF

The SPDR S&P Retail (ETF) XRT tracks 101 U.S. companies across 12 sub-sectors, with apparel retail at 24 percent and specialty stores at 16 percent being the most heavily weighted.

The top individual holdings are:

• CONN'S, Inc. CONN with a 1.5 percent weighting
• Rite Aid Corporation RAD making up 1.3 percent
• Orbitz Worldwide, Inc. OWW at 1.3 percent

XRT is up 16 percent over the last 12 months and 13 percent over the last six months. The ETF has an expense ratio of 0.35 percent.

Market Vectors Retail ETF

The Market Vectors Retail ETF RTH follows 26 of the most liquid companies in the retail sector based on market capitalization and trading volume.

The top holdings include:

• Home Depot Inc HD at 8.6 percent
• Amazon.com, Inc. AMZN at 8.4 percent
• CVS Health Corp CVS at 7.7 percent

RTH is up 29 percent over the last 12 months and up 22 percent over the last six months. The ETF has an expense ratio of 0.35 percent.