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5 ETFs For Loads Of Holiday Shopping Delight
The holiday season saw a gala start on an e-commerce bonanza. Smartphones and special deals on apps took charge of the shopping scene, with brick-and-mortar retail sales clearly losing steam. The Thanksgiving weekend, Black Friday and especially Cyber Monday demonstrate the growing popularity of mobile shopping and changing consumer habits. Further, strengthening of U.S. economic activities and a slew of upbeat economic data, especially on the job, auto and housing fronts, provide strong support to the holiday season, though consumer confidence has been shaky. Recap of Thanksgiving Weekend and Cyber Monday According to RetailNext, brick-and-mortar sales fell 4.7% to $20.4 billion over the four-day Thanksgiving weekend, while it dropped 10.4% year over year, as per ShopperTrak. Meanwhile, online sales grew 25.2% year over year during the weekend, as per IBM, and 25% on Thanksgiving Day and 14% on Black Friday, with combined sales of $4.45 billion, as per Adobe. After a massive surge in online sales on Black Friday, Cyber Monday once again became the heaviest online spending day ever, exceeding over $3 billion in sales for the first time. Online sales jumped 21% from last year and hit $3.12 billion for the first time, as per web analytics firm ComScore . Total online spending climbed 15% to $11 billion from Thanksgiving Day through Cyber Monday (November 26 to 30), according to Adobe. Most of the spending came from mobile devices, suggesting that mobile shopping is on the rise. Sluggish Consumer Sentiment The Consumer Confidence Index measured by the Conference Board – a barometer of the U.S. consumer health – dropped to its lowest level in a year to 90.4 in November from a revised 99.1 in October. On the other hand, the Thomson Reuters/University of Michigan index of consumer sentiment increased to 91.3 for November from 90 in October. The number was well below the Wall Street Journal expectation of 93.0 and preliminary reading of 93.1 recorded in mid-November. This shows that retailers might struggle to win customers this holiday season. U.S. on Track to Modest Growth Amid sluggish consumer confidence, the U.S. economy is showing impressive growth after a lazy summer. Though the manufacturing sector shrank for the first time in three years in November on a weak global economy and a strong dollar, robust automobile sales and construction spending suggest the economy is on a firmer footing. This is especially true as the economy expanded at a solid clip of 2.1% annually in the third quarter, up from the initial estimate of 1.5%, and was followed by 3.9% growth in the second quarter. The solid growth was driven by cheap fuel and greater job security. Hiring came in stronger than expected for November, reflecting back-to-back months of job growth. In particular, the economy added 211,000 jobs in November, much above the market expectation of 200,000, and unemployment remained at a seven-and-half year low of 5%. Further, the pace of hiring in October and September was stronger than previously expected. Average hourly wages rose by four cents last month, following a nine-cent increase in October. Apart from these, a gradual recovery in the housing market as well as stepped-up service activities are propelling the U.S. economy, setting the scene for a decent holiday season. As a result, the National Retail Federation (NRF) expects total holiday sales in November and December (excluding autos, gas and restaurant) to grow at a solid pace of 3.7%. Though this marks a deceleration from last year’s growth rate of 4.1%, it is well above the 10-year average of 2.5%. Online sales are projected to grow 6-8% to $105 billion. As per research firm Forrester, consumers will spend $95 billion this year, up 11% from last year, with mobile shopping playing a crucial role. ComScore expects online sales to jump 14% year over year to $70.06 billion for the full holiday season (November and December), outpacing the growth of brick-and-mortar retail sales. ETFs to Buy Given holiday optimism and a digital shopping boom, stocks and ETFs in the Internet and consumer space look poised for solid gains this month. Investors could tap this opportunity in a diversified way with the help of following ETFs. Each of these products have a solid Zacks ETF Rank of 1 (Strong Buy) or 2 (Buy), and have retuned handsomely over the past 10 days, making them compelling for the holiday season (see all the Consumer Discretionary ETFs here ). Market Vectors Retail ETF (NYSEARCA: RTH ) This fund provides exposure to the retail segment of the broad consumer space by tracking the Market Vectors US Listed Retail 25 Index. It holds about 26 stocks in its basket, with AUM of $142.2 million, while the average daily volume is light at around 75,000 shares. Expense ratio came in at 0.35%. It is a large-cap centric fund, and is heavily concentrated on the top firm Amazon (NASDAQ: AMZN ) with 14.6% share, closely followed by Home Depot (NYSE: HD ) at 8.4%. Sector-wise, specialty retail occupies the top position with 29% share, followed by a double-digit allocation each to Internet and catalogue retail, hypermarkets, drug stores, and healthcare services. The product has added 3.8% over the past 10 days and has a Zacks ETF Rank of 1. SPDR S&P Retail ETF (NYSEARCA: XRT ) This product tracks the S&P Retail Select Industry Index, holding 104 securities in its basket. It is widely spread across each component, as none of these holds more than 1.36% of total assets. Small cap stocks dominate about two-thirds of the portfolio, while the rest have been split between the other two market cap levels. In terms of sector holdings, apparel retail takes the top spot with 21.7% share, while specialty stores, automotive retail, and Internet retail also have double-digit allocation each. XRT is the most popular and actively traded ETF in the retail space, with AUM of about $714 million and average daily volume of more than 4.1 million shares. It charges 35 bps in annual fees and has gained 3.3% over the past 10 days. The fund has a Zacks ETF Rank of 1. PowerShares Nasdaq Internet Portfolio ETF (NASDAQ: PNQI ) This fund follows the Nasdaq Internet Index, giving investors exposure to 94 Internet stocks. It is moderately concentrated on the top 10 holdings, with Amazon, Alphabet (NASDAQ: GOOGL ) and Facebook (NASDAQ: FB ) taking the top three spots in the basket, with at least 8% share each. Internet software and services makes for nearly 56% share in the basket, while Internet and catalog retail takes 39% share. The product has amassed $260.8 million in its asset base, while trades in lower volume of about 25,000 shares per day, on average. Expense ratio came in at 0.60%. PNQI added about 3% in the same time frame and has a Zacks ETF Rank of 2. PowerShares DWA Consumer Cyclicals Momentum Portfolio ETF (NYSEARCA: PEZ ) This product targets the broad consumer space by tracking the DWA Consumer Cyclicals Technical Leaders Index. It holds 38 stocks having positive relative strength (momentum) characteristics, with none holding more than 5.4% of assets. This approach results in a large cap tilt at 43%, followed by 33% in mid caps and the rest in small. About 29% of the portfolio is dominated by specialty retail, while hotel restaurants and leisure, textiles apparel and luxury goods, and airlines round off the next three positions with double-digit exposure each. The fund has managed $274.5 million in its asset base, while it trades in lower average daily volume of 57,000 shares. It charges 60 bps in annual fees, and has added about 1.7% over the past 10 days. The fund has a Zacks ETF Rank of 1. First Trust Consumer Discretionary AlphaDEX ETF (NYSEARCA: FXD ) This follows an AlphaDEX methodology and ranks stocks in the consumer space by various growth and value factors, eliminating the bottom-ranked 25% of stocks. This approach results in a basket of 129 stocks that are well spread out across each security, with none holding more than 1.7% of assets. About 50% of the portfolio is focused on mid cap securities, with specialty retail being the top sector, accounting for nearly one-fourth of the portfolio, closely followed by media (16%). FXD is one of the popular and liquid ETFs in the consumer discretionary space, with AUM of $2.4 billion and average daily volume of 462,000 shares per day. It charges a higher 63 bps in annual fees and has gained 1.5% over the past 10 days. The product has a Zacks ETF Rank of 1. Original Post
Top-Ranked ETFs To Tap India’s Growth Story
Finally, a slew of economic reforms including four rate cuts this year have started to pay off and stimulate growth in Asia’s third-largest economy. This is especially true as India picked up momentum with 7.4% growth in the second quarter (ending September). While this is far below the year-ago growth of 8.9%, it is up from 7% recorded in the first quarter and the market expectation of 7.3%, as per Reuters. Bright Spots A major boost to the economy came from solid progress in the manufacturing, mining and service sectors. Agriculture, industrial, automobiles and consumer durables are witnessing strong growth while investments are also showing signs of recovery. Additionally, current account deficit has narrowed and the currency has moved up significantly. Further, lower oil prices and rising consumer spending have added to economic strength. In particular, the current account deficit has narrowed sharply to around 1.3% of GDP in fiscal 2014-2015, below 1.7% in fiscal 2013-2014. Trade deficit in the first seven months of the current fiscal (April-October) contracted to $77.76 billion from $86.26 billion. Though inflation rose to 5% in October from 4.41% in September, it is expected to decline once the festival season ends. The central bank expects inflation to reach 6% by January 2016 and then moderate to 5% by March 2017. Given the positive developments, India has now become the world’s fastest-growing economy, outpacing China, and remains a bright spot given that most emerging economies are struggling to revamp growth. The Reserve Bank of India expects the country’s economy to grow 7.4% annually for fiscal 2015-2016 and the World Bank projects economic growth of 7.5% for the current fiscal year, followed by further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18. The Organization for Economic Co-operation and Development (OECD) also sees robust growth prospects in India compared to the other emerging markets. It expects GDP growth to remain above 7% in the coming years fueled by more structural reforms. India ETFs to Buy Based on a speedy recovery and bright outlook, we recommend investors to buy India ETFs at least for the short term. For interested investors, we have found a number of top-ranked ETFs in the broad emerging Asia-Pacific space targeting India that have a Zacks ETF Rank of 2 or ‘Buy’ rating and are thus expected to outperform in the upcoming months. Among these, the following five funds could be good choices to play in the coming months and have potentially superior weighting methodologies which could allow them to continue leading the emerging Asia-Pacific space in the months ahead. iShares MSCI India ETF (BATS: INDA ) This ETF follows the MSCI India Total Return Index and charges 68 bps in fees per year from investors. Holding 72 stocks in its basket, the fund is highly concentrated on the top two firms – Infosys (NYSE: INFY ) and Housing Development Finance Corp. ( OTC:HSDGY ) – that together make up for 20.2% of total assets. Other firms hold no more than 6.63% share. Further, the product is slightly tilted toward the information technology sector at 21.7% while financials, consumer staples, health care, and consumer discretionary round off the top five. INDA is the largest and popular ETF in this space with AUM of over $3.5 billion and average trading volume of more than 2 million shares a day. The fund is down 7.9% in the year-to-date time frame. WisdomTree India Earnings Fund (NYSEARCA: EPI ) This product tracks the WisdomTree India Earnings Index, holding 238 profitable companies using an earnings-weighted methodology. Reliance Industries and Infosys occupy the top two positions with a combined 17.9% of assets while other firms hold less than 5.8% share. The fund is heavy on financials with one-fourth share, while energy and information technology also get double-digit allocation in the basket. The fund has amassed nearly $1.7 billion and trades in volume of more than 4.8 million shares a day. Expense ratio came in at 0.83%. The fund has lost about 9% over the trailing one year. iShares India 50 ETF (NASDAQ: INDY ) This ETF provides exposure to the largest 53 Indian stocks by tracking the CNX Nifty Index. It is pretty well spread out across components with none of the securities holding more than 7.73% of assets. With respect to sector holdings, financials takes the top spot at 26%, closely followed by information technology (16%), consumer discretionary (11%) and energy (10%). The product has managed assets worth $814.9 million and trades in good volume of nearly 320,000 million shares a day. It is the high cost choice in the space, charging 93 bps. The product shed 8.4% in the trailing one-year period. PowerShares India Portfolio (NYSEARCA: PIN ) This fund offers exposure to the basket of 50 stocks selected from the universe of the largest companies listed on two major Indian exchanges by tracking Indus India. The top two firms – Infosys and Reliance Industries – take double-digit exposure each while the other firms hold no more than 5.6% share. From a sector look, the fund is tilted toward energy and information technology, each accounting for over 20% share, followed by financials (12.1%) and health care (10.8%). The fund has amassed $431.7 million in its asset base and trades in solid volume of around 1.3 million shares a day on average. It charges a higher expense ratio of 85 bps and has lost 7.7% in the year-to-date timeframe. Market Vectors India Small-Cap Fund (NYSEARCA: SCIF ) This fund targets the small cap segment and tracks the Market Vectors India Small-Cap Index. In total, it holds 135 securities in its basket with none making up for more than 3.21% of assets. Here again, financials occupies the top position from a sector look at 28.3% while industrials, consumer discretionary, and information technology round off the next three spots. The fund has so far amassed $203.5 million in its asset base while charging 89 bps in annual fees. Volume is good, exchanging around 105,000 shares in hand a day. Bottom Line Given the current trends and favorable dynamics, India will likely get a solid boost. So a solid play on the country might be a good idea. This is especially true if investors take a closer look at the top-ranked ETFs in the space for excellent exposure and some outperformance in the coming months. Original Post