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Retail ETFs Gear Up for Black Friday

The official kickoff to the holiday shopping season is this Friday, with retail focused stocks and exchange traded funds closely watched. The retail sector funds dropped post-election, but have already started to pick up momentum this week.

“Retail analysts say that rolling out the welcome mat on Thanksgiving Day has been a boon to retailers during the economic downturn. The number of people who mall hop on Thanksgiving or fire up the computer rose to 22.3 million in 2010, about double the figure in 2005, according to the National Retail Federation. Last year, the number of shoppers who hit the stores on Thanksgiving at midnight was triple the number in 2009,” Laurie Lucas wrote on The Press Enterprise. [This Sector ETF Could Rebound After Hurricane Sandy]

Despite the so-called fiscal cliff right around the corner and the slow pace of job creation, the fact remains that consumers are willing to spend if the price is right. Consumer discretionary stocks have been stand-out performers this year, and are a classic defense play for seasoned investors. This holiday season is positioned to be a critical one for focused stocks and ETFs. [ETF Spotlight: Retail Sector and Hurricane Sandy]

The Market Vectors Retail ETF (RTH) has gained 17.2% in 2012, with Wal-Mart (WMT), Home Depot (HD) and Amazon (AMZN) as top holdings. About one-third of the portfolio is dedicated to these holdings, making it top heavy, explains Benzinga on Nasdaq . The SPDR S&P Retail ETF (NYSEArca: XRT) is an equal-weight approach, with the auto-retail sub-sector strongly represented. The ETF is up about 21% this year and has beat out the S&P 500, which gained about 14% through September.

Analysts are certain that the converging trends are positive and will support consumer discretionary and retail stocks well into 2013. The S&P’s consumer discretionary sub-sector has recovered smartly this year, showing nearly a 16 % gain year-to-date through November 16. That’s the second-best component of the larger S&P 500 index, which rose 10 %, reports John Wasik for Reuters. [Retail Sector ETFs Rated Overweight by S&P]

Market Vectors Retail ETF

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.