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The Complete Guide To Retail ETFs

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

Guggenheim Launches Equal-Weight Real Estate ETF

By DailyAlts Staff S&P Dow Jones Indices divides the U.S. stock market into ten sectors: Consumer-discretionary, consumer-staples, energy, financials, health care, industrials, materials, technology, telecommunications, and utilities. Real estate investment trusts (“REITs”) and other real estate-related stocks are currently included within the financial sector, but that will change next year , when S&P Dow Jones will break real estate out into an eleventh sub-sector of the S&P 500. Guggenheim Investments, which already has 14 equal-weight “smart beta” ETFs, is staking its claim on the new sector well in advance of its September 2016 debut with the launch of the Guggenheim S&P 500 Equal Weight Real Estate ETF (NYSEARCA: EWRE ). There are currently at least 33 real estate index funds on the market, but most – like the market-leading Vanguard REIT ETF (NYSEARCA: VNQ ) – are market cap-weighted. As a result, Simon Property Group (NYSE: SPG ), by far the U.S.’s largest REIT, dominates many of these other products. But within the Guggenheim S&P 500 Equal Weight Real Estate ETF, the nearly $60 billion SPG makes up just 1/25 of the fund’s holdings, which include the 25 S&P 500 stocks currently classified in the GICS real estate group, excluding mortgage REITs. The danger of market cap-weighted indexes and funds is that overvalued components are overweighted, and undervalued components are underweighted. The Guggenheim S&P 500 Equal Weight Real Estate ETF, by contrast, practices disciplined, systematic rebalancing to reallocate from outperforming to underperforming stocks, thereby potentially capitalizing on the mean-reverting characteristic of securities and ensuring that no single stock dominates the fund’s performance. This difference in weighting does result in both risk and return differences, and equal weighted funds end up having more exposure to stocks with small capitalizations, thus resulting in a small cap bias. How does this play out in performance terms? The following chart from the S&P Dow Jones website compares the equal and cap weighted REIT indices from S&P Dow Jones (see their website for additional disclosures): As of Aug. 31, 2015. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. While the above comparison is not a pure apples to apples comparison (the S&P United States REIT Index is cap weighted, but includes REITS from all cap ranges, while the Equal Weight Index includes only REITS in the S&P 500 Index), the performance of the indices do bear out some differences over time. “The time-tested equal weight strategy can help long-term performance by reducing the bias towards the largest individual companies within a particular cap-weighted strategy,” said William Belden, Guggenheim’s Managing Director of Product Development, in a recent statement. “An equal-weight approach also may enhance portfolio diversification by reducing concentration risk often found in cap-weighted indices and provide a more balanced exposure across market capitalizations.” For more information, visit the fund’s webpage . Past performance is not necessarily indicative of future performance

Gold Climbs Today, Is There Opportunity In Gold ETFs?

The SPDR Gold Trust ETF (NYSEARCA: GLD ) might follow the age-long market adage of climbing the wall of worry and sliding the slope of hope as fears about a September rate hike rise and fall. The Wall Street Journal reports that gold prices opened higher in European trade today as fears about when the U.S. Federal Reserve is likely to raise interest rates. The WSJ reports that Spot gold prices were up 0.7% at $1,142.11 a troy ounce on the London Spot Market this morning. In fact, the yellow metal has hit a four-day high earlier in the session at $1,144.28 an ounce. Today’s gains continue the positive trend that has had gold climbing towards the symbolic resistance level of $1,150. The yellow metal is starting to look attractive again after the investors hand traders have exhausted themselves in trying to time the market in relation to a September rate hike. Yesterday, spot gold climned 0.04% to $1,134 an ounce in U.S. markets despite views by Fed vice president Fischer that a September rate hike is probable because it makes sense. Analysts see uptrend in sight for GLD Analysts are optimistic about the prospects of the bullion and GLD going forward as the market enters September. The market seems to think raising of interest rates this month would be a decisive action that will lead gold to a bottom and remove much of the volatility. In contrast, if the Fed doesn’t raise rates this month, the market will be at peace at least until talks about a rate hike begins again in December. Analysts at UBS say: Gold has been closely tracking changes in Fed policy expectations of late and we expect this influence on price action to continue up ahead… The link is likely going to become more acute in the next two weeks as the September FOMC [Federal Open Market Committee] meeting draws near. Analysts at Barclays are also positive about the prospects of gold. They said, “Further support from U.S. rate expectations should… be limited, as the market is already pricing in a low probability of a September hike. Howie Lee, an investment analyst at Phillip Futures believes that the market should see less volatility in gold prices going forward. In his words, “We still stand by our view that gold is likely to trade above $1,100 in the near-term and that the momentum right now is for gold to rally more than to fall.” Is there an opportunity in gold ETFs? Gold and GLD seems to be on track to have a pleasant run this week as the precious metal continues to trade above a more than five-year closing low of $1,084 that was reached on August 5 the China’s economy took a hit . Saxo Bank, in a research note that was released yesterday observed that last week’s short positions in the bullion were cut by 22% in contrast to a four-fold increase of 845,000 in long ounces. Link to the original article on Learn Bonds