Consumer Discretionary Select Sector SPDR (NYSE:XLY)
The XLY is a much less direct play on retail, with about 40% of the fund dedicated to the sector. Instead, you also get heavy exposure to media stocks (31%) and hotels/restaurants/leisure (16%), as well as splashes of other sectors.
Also unlike XRT, the Consumer Discretionary SPDR is not equal-weighted. Of XLY’s 80 holdings, five — Comcast (NASDAQ:CMCSA), Home Depot (NYSE:HD), Walt Disney (NYSE:DIS), McDonald’s (NYSE:MCD) and Amazon (NASDAQ:AMZN) — account for 32% of the fund’s weight. Of course, those are five really solid companies. Also note that XLY is the cheapest of the five funds listed here.
Expense Ratio: 0.18%
PowerShares Dynamic Retail ETF (NYSE:PMR)
The PMR holds only 30 stocks, but its weightings aren’t terribly lopsided. Most of the PowerShares fund’s holdings read like a mall directory, and Walmart (NYSE:WMT) is a top-five weight at 5%. However, PMR’s top three holdings — CVS Caremark (NYSE:CVS), Kroger, Costco (NASDAQ:COST) — aren’t exactly the hottest spots around the holidays.
Dubiously, PMR has been the worst performer among the four regular equity funds listed here, while also being the most expensive (almost double the cost of the XRT and our next ETF).
Expense Ratio: 0.63%
Market Vectors Retail ETF (NYSE:RTH)
This took the place of the same-tickered HOLDRS ETF back in December 2011, so it doesn’t have much of a track history. A bet on RTH might as well be a bet on Walmart, Home Depot and Amazon, which make up a whopping 36% of the fund. WMT itself accounts for 14%!
It’s the most defensive of these ETFs, split 45/45 between cyclicals and defensives, and the rest is in (of all things) healthcare stocks like McKesson (NYSE:MCK) and Cardinal Health (NYSE:CAH). It’s also a small fund, at just $14 million in assets under management.
Expense Ratio: 0.35%
Direxion Daily Retail Bull 3X Shares (NYSE:RETL)
This is by far the riskiest play on retail. The RETL is a leveraged fund that seeks to return 300% of the performance of the Russell 1000 Retail Index, which is led by HD, AMZN, Costco, Target (NYSE:TGT) and others. Simply put — if retail does well, RETL will absolutely juice your returns. If it doesn’t, you’re smoked.
Either way, before you ever touch a leveraged ETF, check out the risks. (And realize that Direxion will take its pound of flesh, with expenses of more than 1%.)
Expense Ratio: 1.07%