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As a pioneer in retail business, the United States provides ample growth opportunities for all types of retail companies. From growth perspective, retail ranks among the dominant U.S. industries and employs an enormous workforce. Retail sales represent approximately 30% of consumer spending, which itself accounts for more than two-thirds of the economy. The U.S. economy is sending out signals of growth, driven by lower oil prices and an improved job market. In July, 215,000 people were hired, reflecting improved employment prospects. According to the recent data from Bureau of Labor Statistics, the unemployment rate for July was constant at 5.3% reached in the previous month, its lowest level since Sept. 2008. This improvement in the job scenario is likely to boost consumer confidence and provide them with a sense of security when it comes to purchasing power, thereby increasing consumer spending. According to a recent Conference Board data, the Consumer Confidence Index rebound in August increased to 101.5 from July’s reading of 91.0. Moreover, consumer spending increased 3.1% in the second quarter from the initial estimate of 2.9%, and also improved considerably from the first quarter’s spending rate of 1.8%. July retail sales growth of 0.6% also validates the pickup in consumer activity. Additionally, real GDP expanded at a 3.7% seasonally-adjusted annual rate in the second quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis. This fared way better than the “advance” estimate of a 2.3% increase and 0.6% growth recorded in the first quarter. The positive revision in GDP numbers reflects a rise in consumer spending, higher business spending, increased investment in intellectual property products and larger inventory levels at businesses. An expected rebound in the economy, combined with declining unemployment rate, cheap gasoline prices, higher consumer confidence and improving consumer spending, the retail space is bubbling with optimism. ETFs present a low cost and convenient way to get a diversified exposure to this sector. Below we have highlighted a few ETFs tracking the industry: SPDR S&P Retail (NYSEARCA: XRT ): Launched in June 2006, SPDR S&P Retail is an ETF that seeks investment results corresponding to the S&P Retail Select Industry Index. This fund consists of 103 stocks, the top holdings being Netflix Inc. (NASDAQ: NFLX ), Amazon.com Inc. (NASDAQ: AMZN ) and Casey’s General Stores Inc. (NASDAQ: CASY ), representing asset allocation of 1.33%, 1.29% and 1.22%, respectively, as of Aug. 28, 2015. The fund’s gross expense ratio is 0.35%, while its dividend yield is 1.04%. XRT has $1,118 million of assets under management (AUM) as of Aug. 31, 2015. Market Vectors Retail ETF (NYSEARCA: RTH ): Initiated in Dec. 2011, Market Vectors Retail ETF tracks the performance of Market Vectors US Listed Retail 25 Index. The fund comprises 26 stocks, the top holdings being Amazon.com Inc. ( AMZN ), Home Depot Inc. (NYSE: HD ) and Wal-Mart Stores Inc. (NYSE: WMT ), representing asset allocation of 12.78%, 8.66% and 7.75%, respectively, as of Aug. 31, 2015. The fund’s net expense ratio is 0.35% and dividend yield is 0.39%. RTH has managed to attract $216.9 million in AUM till Aug. 31, 2015. PowerShares Dynamic Retail (NYSEARCA: PMR ): PowerShares Dynamic Retail, launched in Oct. 2005, follows the Dynamic Retail Intellidex Index and is made up of 30 stocks that are primarily engaged in operating general merchandise stores such as department stores, discount stores, warehouse clubs and superstores. The fund’s top holdings are O’Reilly Automotive Inc. (NASDAQ: ORLY ), The Home Depot Inc. ( HD ) and CVS Health Corp. (NYSE: CVS ), reflecting asset allocation of 5.66%, 5.34% and 5.24%, respectively, as of Sept. 1, 2015. The fund’s net expense ratio is 0.63%, while its dividend yield is 0.61%. PMR has managed to attract $24.7 million in AUM as of Aug. 31, 2015. Original Post Scalper1 News
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