The Best Holiday ETFs for 2020
Holiday sales account for around a quarter of annual sales of jewellery, clothing, electronics and appliances and sporting goods. With the holiday season around the corner, apparel, consumer electronics, games and toys are likely to be big tickets. From the investor’s point of view, consumer discretionary and consumer cyclical stocks become interesting after October. Some of the businesses in these sectors have been moving online for sometime. For 2020, we can expect to see an accelerated adoption of online purchases as winter holidays approach. Since online sales may post a larger number than in-store this year, retail companies that have built a brisk e-commerce presence are in a stronger position. Also, this year, as a result of the lock down, DIY projects have been driving home improvement stocks. Hospitality and travel are clearly not going to see much traffic and so retail ETFs, especially the ones with more weightage in companies with a strong e-commerce revenue segment are in focus. Let’s take a look at what may be The Best Holiday ETFs for 2020.
Amplify’s IBUY ETF
Amplify’s IBUY seeks to match the EQM Online Retail Index before fees and expenses and has $911.7 million in assets under management. The fund selects businesses that have over 70% of gross revenues from their online sales. The fund was launched in 2016 with an expense ratio of 0.65% and its top holdings include Peloton Interactive Inc., Overstock.com Inc, Carvana Co., Stitch Fix Inc., and Etsy Inc.
S&P Retail ETF XRT
SPDR S&P Retail ETF, XRT is an equal-weighted fund that seeks to match the performance of the S&P Retail Select Industry Index, before fees and expenses. The fund was launched in 2006 and has an expense ratio of 0.35%. Assets under management total to $442.65 million while top holdings include Gamestop Corp. Class A, Group 1 Automotive Inc., Magnite Inc., Overstock.com Inc and Etsy Inc. The Internet and Direct Marketing Retail sector accounts for the largest allocation at 22.95%
Proshare’s Online Retail ETF ONLN
Proshare’s Online Retail ETF ONLN is a direct competitor to IBUY with a lower expense ratio of 0.58%. Launched in 2018, it has $165. 5 million in assets under management. It tracks the Proshares Online Retail Index before fees and expenses. Its top holdings include Amazon.com Inc, Alibaba Group Holdings, Qurate Retail Inc., Ebay Inc., and Etsy Inc.
Proshares Long Online/Short Stores ETF CLIX
Yet another offer from ProShares that focuses on online retail is ProShares’ Long Online/Short Stores ETF (CLIX). The ETF has $236 million in assets under management and focuses on the growth of e-commerce rather than in–store sales. With an expense ratio of 0.65%, it was launched in 2017 and its holdings include Amazon.com Inc., Alibaba Group Holdings, and Ebay Inc.. The fund tracks the ProShares Long Online/Short Retail Index and has a short position in in-store retail businesses.
Vaneck Vector Retail Fund RTH
The Vaneck Vector Retail Fund (RTH) was launched in 2011 and tracks, before fees and expenses, the MVIS US Listed Retail 25 Index. With an expense ratio of 0.35%, its assets under management amount to $188 million. Its top holdings include Amazon.com Inc., Home Depot Inc., Walmart Inc., Lowes Company Inc., and Costco Wholesale Corp.
Global X E-commerce ETF EBIZ
Global X e-commerce ETF (EBIZ) seeks to match the performance of the Solactive e-Commerce Index before fees and expenses. With $28 million in assets under management, its top holdings include Etsy Inc., Wayfair Inc. Class A, JD.com, Rakuten Inc., and Costar group. Launched in 2018, its expense ratio is 0.50%
SPDR Consumer Discretionary Select Sector Fund XLY
The SPDR Consumer Discretionary Select Sector Fund (XLY) seeks to correspond to the price and yield, before fees and expenses, of the Consumer Discretionary Select Sector Index. Launched in 1998 and with $16.4 million in assets under management, it has a low expense ratio of 0.13%. Its top holdings include Amazon.com Inc., Home Depot Inc., MacDonalds Corp, Nike Inc., Class B, Lowes Company Inc. The ETF seeks to provide exposure to specific sectors in retail specialty, multiline, Internet and direct marketing.
The Alps Disruptive Technologies ETF DTEC
The Alps Disruptive Technologies ETF (DTEC), launched in 2017 has $118.7 million in assets under management with a 0.50% expense ratio. It tracks the Indxx Disruptive Technologies Index and provides exposure to select equities in Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics and Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payment. The fund does hold some small and micro cap companies that come with liquidity and other risks. Top holdings include SolarEdge Technologies Inc., Xinyi Solar Holdings Ltd., ams AG, Datadog Inc and Square Inc. While not strictly a holiday ETF, the fund’s focus on sectors that have been performing well may drive the price as the 2020 holiday season gets underway and people continue to resort to mobile payments, IoT devices, cloud, and fintech products and services.
Let’s look at more of what possibly are The Best Holiday ETFs of 2020
Fidelity’s MSCI Consumer Discretionary Index Fund FDIS
Fidelity’s MSCI Consumer Discretionary Index Fund (FDIS) has $1 billion in assets under management. Launched in 2013, the ETF tracks the MSCI USA IMI Consumer Discretionary Index before fees and expenses and has an expense ratio of 0.08%. Its top holdings include Amazon.com Inc., Tesla Inc., Home Depot Inc., MacDonalds Corp and Nike Inc.
Vanguard Consumer Discretionary ETF VCR
Vanguard’s Consumer Discretionary ETF (VCR) was launched in 2004 and tracks the MSCI US Investable Market Consumer Discretionary 25/50 Index. With $4.2 billion in assets under management, its expense ratio is 0.10%. Top holdings include Amazon.com Inc, Home Depot Inc, MacDonalds Corp and Nike Inc.
While consumer discretionary stocks or consumer cyclicals have been the favoured stocks in the holiday season, certain defensive stocks may also be attractive. Travel and eating out options have whittled away and consumer staples and pharma present defensive options and are likely to do well as families stay at home and buy regular groceries during the holidays.
State Street Consumer Staples Select Sector Fund XLP
State Street’s Consumer Staples Select Sector Fund (XLP) seeks to match the Consumer Staples Select Sector Index before fees and expenses. Launched in 1998, the ETF has Proctor& Gamble Co., Walmart Inc., Coca Cola Co., Pepsi Co., and Costco Wholesale Corp. among its top holdings. It has $13.8 billion in assets under management and an expense ratio of 0.13%.
The pandemic has also affected health, fitness, digital health and telemedicine companies positively.
Global X Telemedicine and Digital Health EDOC
Global X Telemedicine and Digital Health (EDOC) was launched just this July and tracks the Solactive Telemedicine and Digital Health Index before fees and expenses. Its top holdings include Irhythm Technologies Inc., Invitae Corp, M3 Inc, Nuance Communications Inc., and Guardant Health Inc. With $352 million in assets under management, its expense ratio is 0.68$.
As we enter the last quarter of the year and enter the holiday season, the above ETF’s warrant a closer look to determine whether these will be The Best Holiday ETFs of 2020.