6 Best Retail ETFs to Invest in • Benzinga (2024)

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Exchange-traded funds (ETFs) have transformed the investment industry. A single ETF has multiple holdings of several companies based on a certain theme. Buying just one ETF on the stock exchange instantly diversifies a portfolio, which is a good thing for the chance of a profit.

Retail ETFs focus on companies, stores and websites that earn their keep through retail sales. Benzinga has compiled six (technically seven) of the highest-profile retail ETFs that can give your portfolio a lift.

6 Best Retail ETFs

Here is the breakdown of six favorite retail ETFs.

1. SPDR S&P Retail ETF (NYSEARCA: XRT)

This SPDR S&P retail fund from State Street has the highest-valued assets under management (AUM). Launched in 2006, XRT looks after more than $450 million in holdings. It tracks the , covering an impressive cross-section of brick-and-mortar and online retailers (Amazon, Home Depot, Walmart).

The SPDR fund experienced a big boost during the COVID-19 pandemic as online retailers boomed. It’s since receded slightly, but share prices have remained consistently in the $55-$75 range for the last 12 months. XRT is subject to the ongoing volatility of the retail industry, but the low expense ratio of 0.35% can offset the downturns. Overall it’s one of the very best retail ETFs on the market.

2. Amplify Online Retail ETF (NYSEARCA: IBUY)

The Amplify Online Retail ETF is squarely focused on online retail stocks. It tracks the EQM Online Retail Index, with Amazon, Alibaba and Shopify as the biggest. IBUY’s top holdings include Carvana, Wayfair, Overstock and Netflix. Amplify touts its IBUY fund as a globally diverse ETF covering outlets that get at least 70% of total revenue from online or virtual transactions.

Launched in 2016, the Amplify Online Retail ETF also experienced a boom during the pandemic. Share prices hit an all-time high of $130.59 in February 2021. Prices have come down to earth since then, as its 52-week range currently sits between $37 to $55. The value of IBUY’s AUM totals $187 million, with a very low expense ratio of 0.65%.

Since 2018, the ProShares Online Retail ETF has placed its bets on the future of online retail. It tracks the performance of the ProShares Online Retail Index. Its list of holdings is fairly small for a retail fund. As of July 2023, only 19 companies are in the ETF, with Amazon taking up nearly a quarter of its portfolio. Alibaba, Carvana, eBay, Etsy and Chewy are among its other holdings.

The net asset value for ONLN currently sits at $111 million, with an expense ratio of 0.58%. Like IBUY, the ProShares Online ETF experienced a boom near the midpoint of the COVID-19 pandemic in February 2021 when share prices exceeded $90. It’s since fallen back to pre-pandemic levels, currently in the $35 area. That, however, represents a solid year-to-date (YTD) return of over 27%.

Consumer staple stocks are at least a little immune to adverse economic conditions. They represent products that are consistently in demand in both good and bad times. The iShares US Consumer Staples ETF features the very top retail stocks from companies making staple items. Procter & Gamble, PepsiCo, Coca-Cola, Philip Morris and Colgate-Palmolive are among its holdings.

The IYK ETF is considered to be a defensive fund, as it remains relatively stable during financial downturns. Launched in 2000, the iShares US Consumer Staples fund has steadily gained with few hiccups ever since.

After a brief blip in the general stock market tumble of March 2020, it’s been on fire. Its current share price of over $203 is just a few dollars off its all-time high of $210.10. IYK’s net asset value hovers around $1.7 billion with a 0.36% expense ratio.

5. VanEck Retail ETF (NASDAQ: RTH)

The VanEck Retail ETF tracks the MVIS US Listed Retail 25 Index (MVRTHTR). This index comprises 25 of the top worldwide companies that earn at least half of their revenue through retail.

The RTH fund reflects that index exactly, with major stakes in Amazon, Home Depot, Costco, CVS, Autozone and more. These big corporations wield the most influence over the retail sector — both online and physical in all facets of the supply chain.

Since its 2011 inception, the VanEck Retail ETF has shown steady growth. It hit an all-time high share price of $194.70 in December 2021 and has remained in the $150-$175 range in the last 52 weeks. Its AUM is valued at nearly $155 million with a low expense ratio of 0.35%.

These two Direxion funds are leveraged ETFs. These are funds that make bets on market fluctuations. A bull ETF is built to make more money during bull markets when the economy is doing well. Conversely, a bear ETF works as a hedge in downturns. The AMZU and AMZD funds focus on one company — Amazon.

At the moment, the AMZU Bull fund’s holdings include just four companies. Amazon’s one of them, but the rest are investment funds and cash management services that track Amazon closely. The object of the AMZU is to return 150% of Amazon’s profits in a bull market (hence the “1.5X”).

The AMZD Bear fund is an inverse investment ETF. It serves as a hedge in bear markets, shielding stockholders from severe losses. The AMZD fund does not include Amazon in its holdings. Instead, it holds stakes in Dreyfus and Financial Square, two cash management firms.

Despite their differences, the two Direxion Amazon ETFs have similar share prices. As of July 2023, both are trading between $21 and $24. Due to their get-rich-somewhat-quick objectives, these funds should be short positions, unlike the other ETFs in this post that are better buy-and-hold opportunities.

What Are Retail ETFs?

Retail ETFs are funds centered around the retail industry. They include physical stores, online retailers, manufacturers and financial services that cater to consumer goods. A typical consumer ETF might have holdings in retail outlets like Home Depot, Amazon, Dick’s Sporting Goods and others. It might also have shares in Procter & Gamble, PepsiCo or Ralston-Purina.

Why Invest in Retail ETFs?

People are always going to buy things, which is good because most retail ETFs rely on the consistency of the marketplace. The retail industry has successfully recovered from COVID-19-era dips, and those who held onto retail ETFs are seeing their profits return. For those just now hopping aboard the ETF train, they could bring long-term, higher returns on investment.

Where to Invest in Retail ETFs

Here’s a table that shows where you can shop for retail ETFs easily:

Support — and Profit From — the Global Retail Industry

Retail ETFs are as close to a safe bet as you can find in the ETF marketplace. While the retail industry has had its ups and downs over the past few years, it’s currently on the rebound. As the dust settles on the rise of online outlets and the changes in physical sales, a retail ETF or two can broaden your chances of a profitable future.

Frequently Asked Questions

Best Retail ETF Methodology

In making this list, Benzinga focused on a few aspects of each ETF, including:

• Market cap
• Value of assets under management
• Expense ratio
• Long-term track record
• Overall popularity in the ETF market