Black Friday boosts retail-focused ETFs

Nov 29th, 2016 | By | Category: Equities

Record-breaking sales on Black Friday have added a further boost to retail-focused exchange traded funds across Europe and the US.

Black Friday boosts retail-focused ETFs

US shoppers on mobile phones bought $3.05bn on Black Friday, adding to sales of almost $2bn on Thanksgiving day.

According to the Financial Times, US shoppers on mobile phones bought $3.05bn on Black Friday, adding to sales of almost $2bn on Thanksgiving day.

Sales over the festive season will be a sign of consumer sentiment strength in the US after a divisive and, for some, unexpected presidential result.

The SPDR S&P 500 Trust (NYSE ARCA: SPY), which has Amazon as the fifth largest holding and holds approximately 12.4% in consumer discretionary stocks, was up 2.3% in USD terms in the eight days running up to Black Friday.

Walmart and Amazon were the top two retailers battling for sales, with each offering steep discounts and offers of free shipping.

Walmart has sales close to $500bn every year and is also investing billions of dollars to catch up with rival Amazon. Compared to last year, Walmart has doubled its products available to customers, started offering deals earlier in the year, and has built ten so-called “fulfilment centres” to deal with online orders.

Commenting on the continuing rise of online shopping, Moody’s retail analyst Charlie O’Shea said: “They [retailers] need to accept the fact that bricks and mortar stores should see softening sales but should pick up [the slack] online.”

“The fastest growing retailer is Amazon and they’re completely online.”

The busiest period of the year for retailers is not over yet as Thanksgiving and Black Friday extends through to Cyber Monday, before entering the final stretch to Christmas.

The National Federation of Retailers says the proportion of people shopping in store, online and via apps over the long Christmas weekend will rise to 59%, equating to 137.4m Americans, up from 58.7% in 2015. Its survey estimated that more than half of shoppers have already started gift shopping.

Investors seeking exposure to US retailers may wish to consider the following ETFs.

The SPDR S&P US Consumer Discretionary Select Sector UCITS ETF (LON: SXLY) has 86 holdings, with 12.9% in Amazon, 6.8% in Home Depot and 6.1% in Walt Disney, all stores that offered customers big deals in mid-November. It has risen 3.7% since 14 November in USD terms. It’s total expense ratio (TER) is 0.15%.

The iShares S&P 500 Consumer Discretionary Sector (LON: IUCD) tracks the same index and also has a TER of 0.15%, the same price as SXLY.

The SPDR S&P US Consumer Staples Select Sector UCITS ETF (LON: SXLP) also features big stores. The fund is much more concentrated, however, holding just 37 stocks, with 6% in Walmart, 4.5% in CVS and 4.3% in Walgreens, another three major stores wooing customers over the holiday season. It also costs 0.15% and is up 1.7% in USD terms since 14 November.

Retailers in Europe will also benefit as the American concept of Black Friday gradually becomes entrenched in the UK and other countries.

The cheapest fund with exposure to European retailers is from Amundi at 0.25% – the Amundi ETF MSCI Europe Consumer Discretionary UCITS ETF is up 2.2% since 14 November in euro terms. Most of the 70 companies are based in Germany, France and the UK, and top holdings include Spanish clothing company Inditex and Adidas.

Tags: , , , , , , ,

Leave a Comment



More in Equities
US Global Investors launches smart beta precious metal miners ETF
US Global Investors launches precious metal miners ETF with smart beta overlay

A new smart beta ETF providing exposure to precious metal mining companies has been launched on the Toronto Stock Exchange.

Solactive launches thematic future cars index
Solactive launches future cars index, licensed to Evolve Funds for ETF

Solactive has launched the Solactive Future Cars Index Canadian Dollar Hedged which is the underlying for a new ETF from Evolve Funds listed...

Close