5 Hot ETF Deals For The Holiday Season

The holiday season saw a gala start with both online and in-store shopping surging on promotions, heavy discounts and free shipping. Additionally, encouraging economic and industry fundamentals, strong earnings and a bullish stock market are laying a strong foundation for the festive period.

Fast Recap of Thanksgiving Weekend

Per the latest data from National Retail Federation (NRF), more than 174 million Americans shopped in stores and online during the Thanksgiving weekend (from Thanksgiving through Cyber Monday), much higher than the pre-holiday prediction of 164 million consumers. Average spending per person over the five-day period was $335.47, with 75% going toward gifts. The biggest spenders were older millennials (25-34 years old) at $419.52.

Adobe Insights shows that U.S. retailers raked in a record $13.03 billion online sales from November 23 through 26, up 14.4% year over year. Online sales have climbed 16.8% from last year to $50 billion so far this holiday season (November 1-27). Adobe expects 2017 be the first-ever holiday season to break $100 billion in online sales (read: 4 Strong Reasons to Buy Retail ETFs Ahead of Black Friday).

According to a survey from Gordon Haskett Research Advisors, stores remain the most popular destination to shop during the Black Friday weekend given that 48.2% of consumers shopped more in store, 36.9% spent more online and 14.9% split their purchases evenly between the two.

Record Consumer Confidence

Americans are highly optimistic about the economy this holiday season. The Consumer Confidence Index — a barometer of the U.S. consumer health measured by the Conference Board — climbed to the highest level in 17 years to 129.5 in November, up from 126.2 in October.

On the other hand, the University of Michigan index of consumer sentiment decreased to 98.5 in November from 100.7 in October, the highest level since January 2004.

U.S. on Solid Growth Path

The economy is expanding at the fastest clip in three years with the best back-to-back quarters of at least 3% GDP growth. Unemployment dropped to the lowest level since December 2000 to 4.1%. Meanwhile, consumer spending, which accounts for more than two-thirds of U.S. economic activity, recorded its biggest increase in more than eight years in September.

Additionally, recovery in the housing market as well as accelerating manufacturing and service activities are driving the U.S. economy higher, setting the case for a stronger holiday season (read: Forget Retail, Focus on Broad Consumer Discretionary ETFs).

As a result, NRF expects holiday sales, online and in stores, to grow as much as 4% for November and December to $682 billion. This is higher than last year’s growth of 3.6% and the five-year average of 3.5%. Meanwhile, online sales are projected to grow 11-15% to $136.42-$141.34 billion.

What’s Hot?

Investors should note that it is not only retailers that are splurging on holiday optimism, videogame publishers and online players are also making the most of the annual shopping event. As such, investors should bet on the following ETFs to profit from the holiday season.

SPDR S&P Retail (MX:XRT) ETF XRT

This product tracks the S&P Retail Select Industry Index, holding 87 securities in its basket with none accounting for more than 2.03%. The fund has amassed $816 million in its asset base and charges 35 bps in annual fees. Volume is extremely solid, exchanging nearly 4.7 million shares in hand a day on average. The fund has gained nearly 11.8% in the past one month and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Should You Buy Retail ETFs Now?).

Amplify Online Retail ETF IBUY

This ETF has attracted $156.3 million in its asset base. It offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund is home to 39 stocks that are widely diversified, with each holding no more than 5.04% of assets. The product charges 65 bps in fees per year and gained 8% in the past one month.

First Trust Dow Jones Internet Index Fund FDN

This fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 42 stocks in its basket with Amazon (NASDAQ:AMZN) accounting for 9.3% share. Amazon has been the showstopper so far this holiday season. FDN is the most popular and liquid ETFs in the broad technology space with AUM of $5.3 billion and average daily volume of around 372,000 shares. It charges 60 bps in fees per year and gained 2.5% in the last 30 days. The product has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Hot Stock & ETF Deals for Cyber Monday).

The ETFMG Video Game Tech ETF GAMR

This is the first ETF targeting the global video game industry of the technology sector including game developers, console and chip manufacturers, and game retailers. It has garnered $56.8 million in AUM and follows the EEFund Video Game Tech Index. Holding 45 securities in its basket, each stock makes up for less than 6% of the assets. It has an expense ratio of 0.75% and trades in a light average daily volume of 17,000 shares. Though videogame players have been pushing up the lineup of titles with a novel approach or by upgrading existing ones this holiday season, GAMR has been down 2.2% in the past one month (read: ETF Stories of November: All About Retail, OPEC and Tax Cuts).

S&P SmallCap Consumer Discretionary Portfolio PSCD

The fund targets the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 110 securities in its basket with none accounting for more than 3% of the assets. The product has attracted $68.5 million in AUM while sees paltry volume of just 5,000 shares per day. The ETF charges 29 bps in annual fees and surged 10.6% in the past month. It has a Zacks Rank #2 with a High risk outlook.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

SPDR-SP RET ETF (XRT): ETF Research Reports

FT-DJ INTRNT IX (FDN): ETF Research Reports

AMPL-ONLN RETL (IBUY): ETF Research Reports

PWRSH-SP SC C D (PSCD): ETF Research Reports

PF-ISE ELEC GMG (GAMR): ETF Research Reports

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