5 Best Retail ETFs To Buy

In this article, we discuss 5 best retail ETFs to buy. If you want to read our discussion on the retail industry, head over to 10 Best Retail ETFs To Buy. 

5. Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY)

5-Year Share Price Performance as of April 1: 56.73%

Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) aims to match the price and yield performance of the Consumer Discretionary Select Sector Index. This index represents the consumer discretionary sector of the S&P 500 Index. The fund provides targeted exposure to companies across specialty retail, broadline retail, hotels, restaurants and leisure, textiles, apparel and luxury goods, household durables, automobiles, automobile components, distributors, leisure products, and diversified consumer services. Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) ranks 5th on our list of the best retail ETFs. The fund was established on December 16, 1998. As of April 1, 2024, the ETF has a gross expense ratio of 0.09%, and a portfolio of 53 stocks. The assets under management came in at $20 billion. 

Tesla, Inc. (NASDAQ:TSLA) is one of the top holdings of the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY). Morgan Stanley has a long-term outlook on Tesla, Inc. (NASDAQ:TSLA), setting a price target of $320 on March 22. This target comprises separate valuations for Tesla’s automotive hardware, auto-related software and services, and energy-related businesses. Analyst Adam Jonas noted Tesla’s expertise in computer vision, machine learning, AI, and robotics, which could have numerous commercial applications. However, Morgan Stanley hasn’t included these potential revenue streams in its current model or valuation.

According to Insider Monkey’s fourth quarter database, 82 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA), compared to 81 funds in the preceding quarter. 

Alger Spectra Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its fourth quarter 2023 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) is an electric vehicle manufacturer with a significant technological lead in its large and rapidly growing addressable market. Tesla is a transportation company that is setting the pace for industry innovation, in our view. During the quarter, the company reported weaker-than-expected fiscal third quarter earnings, where gross margins were negatively impacted by factory downtime and ramping production volumes at new manufacturing plants. However, the company noted that they remain confident by the amount of data that Tesla’s established and growing fleet of vehicles has gathered, which may bode well for the company’s full self-driving capabilities.”

4. iShares US Consumer Staples ETF (NYSE:IYK)

5-Year Share Price Performance as of April 1: 68.75%

iShares US Consumer Staples ETF (NYSE:IYK) aims to replicate the performance of the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index, consisting of American consumer staples sector stocks. It ranks 4th on our list of the best retail ETFs to buy. As of March 28, 2024, iShares US Consumer Staples ETF (NYSE:IYK)’s net assets amounted to $1.33 billion, with a portfolio of 55 stocks and an expense ratio of 0.40%. 

PepsiCo, Inc. (NASDAQ:PEP) is one of the largest holdings of the iShares US Consumer Staples ETF (NYSE:IYK). PepsiCo, Inc. (NASDAQ:PEP) paid a $1.265 per share quarterly dividend to shareholders on April 1. 

According to Insider Monkey’s fourth quarter database, PepsiCo, Inc. (NASDAQ:PEP) was part of 64 hedge fund portfolios, compared to 65 in the last quarter. 

Aristotle Atlantic Core Equity Strategy stated the following regarding PepsiCo, Inc. (NASDAQ:PEP) in its fourth quarter 2023 investor letter:

“We sold PepsiCo, Inc. (NASDAQ:PEP) based on our belief that the inflation and interest rate cycle has peaked, and the company may have difficulty maintaining the recent organic growth trends which were driven mainly by price increases. Furthermore, the market appears to be shifting away from defensive names and into a more cyclical positioning which could cause PepsiCo to lag.”

3. SPDR S&P Retail ETF (NYSE:XRT)

5-Year Share Price Performance as of April 1: 72.47%

SPDR S&P Retail ETF (NYSE:XRT) aims to mirror the total return performance of the S&P Retail Select Industry Index before fees and expenses. It offers exposure to the retail sector of the S&P Total Market Index, including sub-industries like Apparel Retail, Automotive Retail, Computer & Electronic Retail, and more. The ETF tracks a modified equal weighted index, providing diversified industry exposure across large, mid, and small-cap stocks. As of April 1, 2024, the ETF holds $513.86 million in assets under management, along with a gross expense ratio of 0.35%. SPDR S&P Retail ETF (NYSE:XRT) was launched on June 19, 2006. It is one of the best retail ETFs to buy. 

The Gap, Inc. (NYSE:GPS), an apparel retail company, is the largest holding of SPDR S&P Retail ETF (NYSE:XRT). On March 7, the company reported financial results for its fiscal year ended February 3, 2024. The Gap, Inc. (NYSE:GPS) had a non-GAAP EPS of $1.43 and a revenue of $14.89 billion, exceeding Wall Street estimates by $0.25 and $70 million, respectively. 

According to Insider Monkey’s fourth quarter database, 30 hedge funds were bullish on The Gap, Inc. (NYSE:GPS), compared to 23 funds in the last quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 5.57 million shares worth $116.6 million. 

2. Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR)

5-Year Share Price Performance as of April 1: 78.98%

Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR) ranks 2nd on our list of the best retail ETFs. The fund aims to replicate the performance of an index measuring the investment return of consumer discretionary sector stocks. It utilizes passive management, and invests in companies producing products and offering services that consumers purchase on a discretionary basis. Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR)’s expense ratio is 0.10% and its net assets amounted to $6.3 billion as of February 29, 2024. The ETF’s portfolio comprises 306 stocks. 

The Home Depot, Inc. (NYSE:HD) is one of the top holdings of Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR). On March 26, Sunnova Energy International Inc. (NYSE:NOVA) formed an exclusive partnership with The Home Depot, Inc. (NYSE:HD) to offer solar and battery storage services in Home Depot stores across the United States. 

According to Insider Monkey’s fourth quarter database, 70 hedge funds were bullish on The Home Depot, Inc. (NYSE:HD), compared to 76 funds in the prior quarter. 

ClearBridge Sustainability Leaders Strategy made the following comment about The Home Depot, Inc. (NYSE:HD) in its Q3 2023 investor letter:

“The Home Depot, Inc. (NYSE:HD) has long been a leader in advancing sustainable forestry, and its wood products can have a significant impact, as timber rates at the top of high-risk commodities responsible for most agriculture-related deforestation (Exhibit 3). The home improvement retailer adopted its first wood purchasing policy in 1999, pledging to give preference to sustainably sourced wood and to eliminate wood purchases from endangered regions around the world.

Biodiversity-boosting efforts at Home Depot have included tracing the origin of all the wood products it sells. This forms part of the process of verifying sustainable production, which it does using the certification standards of the Forest Stewardship Council (FSC). Since 2000 Home Depot has developed programs to purchase FSC wood products, such as doors, boards and patio furniture, from over 60 global suppliers. It has also moved more than 90% of its cedar purchases to second-and third-growth forests, with the rest coming from areas with local community stakeholder review.”

1. VanEck Retail ETF (NYSE:RTH)

5-Year Share Price Performance as of April 1: 98.00%

VanEck Retail ETF (NYSE:RTH) is one of the best retail ETFs to buy. VanEck Retail ETF (NYSE:RTH) aims to closely match the price and yield performance of the MVIS US Listed Retail 25 Index before fees and expenses. This index tracks the overall performance of companies engaged in different aspects of retail, including distribution, online retail, direct mail, TV retailing, specialty retail, and food and staples retail. As of April 1, 2024, VanEck Retail ETF (NYSE:RTH) holds $213.85 million in total assets, with an expense ratio of 0.35%. The fund was established on December 20, 2011. 

Costco Wholesale Corporation (NASDAQ:COST) is one of the largest holdings of VanEck Retail ETF (NYSE:RTH). On March 7, Costco Wholesale Corporation (NASDAQ:COST) reported a Q2 non-GAAP EPS of $3.71, beating market estimates by $0.07 and a revenue of $58.44 billion, missing Wall Street consensus by $690 million. 

According to Insider Monkey’s fourth quarter database, 57 hedge funds were long Costco Wholesale Corporation (NASDAQ:COST), compared to 65 funds in the last quarter. 

Madison Sustainable Equity Fund stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its fourth quarter 2023 investor letter:

“Costco Wholesale Corporation (NASDAQ:COST) reported solid holiday results and announced a special dividend of $15 per share. Earnings were better than expected driven by better gross margin. Same store sales were 3.9% with solid traffic. Costco also noted better discretionary trends and solid seasonal sales.”

Should you invest $1,000 in Costco right now?

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