For those looking for healthy returns with minimal risk, it’s best to invest in the best retail ETFs to buy.
Diversification is critical for investors in today’s dynamic investing environment, and wagering on exchange-traded funds might be the best course of action.
ETFs are a go-to choice for investors seeking widespread exposure to multiple industries and indices.
With inflation rates hitting 40-year highs and interest rates skyrocketing, the retail sector took a massive hammering last year. Even in the face of adversity, the sector has been incredibly resilient, and investing in the right ETFs can help capitalize on the potential for a strong rebound.
The recent U.S. consumer spending report has shown that personal savings of 4.6% are still well below pre-pandemic levels. Hence, the retail sector will remain robust for the foreseeable future.
|XRT||SPDR S&P Retail ETF||$61.51|
|IYK||iShares US Consumer Staples ETF||$201.90|
|ONLN||ProShares Online Retail ETF||$30.63|
SPDR S&P Retail ETF (XRT)
SPDR S&P Retail ETF (NYSEARCA:XRT) covers a wide swath of the U.S. retail sphere. Some of its top holdings include stocks such as Dillard’s (NYSE:DDS), Dick’s Sporting Goods (NYSE:DKS), and Target (NYSE:TGT).
The fund currently suffers from tepid consumer confidence, marred by rising inflation and interest rates, clouding the outlook for discretionary spending. The ETF’s current price reflects the current downturn, with its stock tanking almost 20% last year.
The great thing about the fund is that its expense ratio of 0.3% is more than 25% lower than the sector median. Its Bid/Ask percentage of 0.02 is 88% lower than the sector median. A lower Bid/Ask percentage signifies higher liquidity and lower trading costs for the ETF.
XRT has grown its dividends at roughly a 23% CAGR over the past three years.
iShares US Consumer Staples ETF (IYK)
The iShares US Consumer Staples ETF (NYSARCA:IYK) offers a safe harbor for investors amidst a relatively unpredictable time in the economy.
The ETF relies heavily on the consumer defensive industry, a sector that is effectively shielded from structural headwinds. This was shown in the poor returns it gave last year, in contrast to most stocks falling by single and double-digit margins.
IYK has generated over 130% return over the past decade, with dividend growth of over 10% during the same period.
It has paid a dividend in the past 22 consecutive years, and with investments in dividend behemoths, expect its robust track record to continue for the foreseeable future.
ProShares Online Retail ETF (ONLN)
The ProShares Online Retail ETF (NYSEARCA:ONLN) is an interesting pick for those looking to ride the online retail trend over the long term.
The fund started trading back in 2018 and has 27 different holdings. It has investments in some of the most popular online retail giants, such as Amazon (NASDAQ:AMZN), Alibaba (NYSE:BABA), and Newegg Commerce (NASDAQ:NEGG).
The ETF took a hammering last year due to the sector’s cyclical nature. However, it appears that the stock has bottomed out and is poised for a snapback with the rebound in the U.S. economy.
For instance, the Atlanta Fed forecasts that the U.S. GDP could rise by 3.2% during the first quarter of this year, up from its earlier forecast of less than 1% growth.
The U.S. makes up the bulk of ONLN stock’s portfolio, pointing to a positive future for the fund.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.