Retailers Show Steady Improvement

Since coming off a mid-July low, the Dow Jones US Broadline Retailers Index has shown steady improvement.

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Dollar stores, club stores, Wal-Mart (WMT) and (AMZN) have been the best performers in the group over the last 6 months as consumers went in search of lower cost retailers to offset rising food and gas prices.

The SPDR S&P Retail ETF (XRT) tracks the S&P Retail Select Index.  The equal weighted fund holds 55 stocks including Wal Mart (WMT), CVS Caremark (CVS), Target (TGT),Walgreen (WAG) and Costco (COST) and carries an expense ratio of 0.35%.

The PowerShares Retail Portfolio (PMR) tracks the Retail Intellidex –  a rules-based index that selects stocks for greatest potential performance based on fundamental metrics.  Top holdings include Home Depot(HD), Lowes (LOW), Wal-Mart, Kroger (KR) and AutoZone (AZO).  The fund’s expense ratio is 0.64% and has a dividend yield of 3.1%.

Real estate will eventually benefit from the pick-up in retail.  One way to gain exposure is through FTSE NAREIT Retail Index Fund (RTL), a fund that invests in US retail properties.  Over 25% of the fund is invested in Simon Property Group (SPG), a large operator of shopping malls and outlet centers.