Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Investors looking for exposure to discretionary consumer spending and specifically to the retail sector can consider SPDR S&P Retail ETF XRT. This sector-specific exchange-traded fund holds 97 U.S. companies operating   Read more 

Bull Case

This fund is a very low-cost retail-focused ETF. Its 0.35% expense ratio is also markedly lower than comparable mutual funds.
History has shown that cyclical stocks tend to rally several months in advance of economic recovery. Some (risk-tolerant) investors may view this ETF as a high-beta way to ride future market rebounds.
This fund's equal-weighting methodology translates into more diverse exposure to the retail industry. Read more 

Bear Case

Aside from being heavily dependent on disposable household income and consumer spending, the firms in this portfolio are also susceptible to changes in demographics and fickle consumer tastes.
Consumer confidence has fallen in recent months, and many retailers anticipate a weak 2013 holiday season. Read more 

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