Best Retail ETFs for the 2023 Holiday Season

We highlight the top retail ETFs that can benefit from consumer spending.

kent
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Research Lead
Reviewed by: Mark Nacinovich
,
Edited by: Ron Day

Will retail ETFs deliver more gifts to investors this December? 

Exchange-traded funds focusing on retail stocks had a strong November, and there could be some upside potential remaining for consumer-related investments this holiday season. 

One of the primary economic themes of 2023 is a resilient U.S. consumer who continues to spend on discretionary items, even as they complain about higher prices. Nearly 3 million passengers boarded flights in the U.S. for Thanksgiving travel on Sunday, eclipsing the previous record set in November 2019. 

On Tuesday, the Conference Board reported that its Consumer Confidence Index rose in November, after three straight monthly declines. That news came on the heels of year-over-year gains in Black Friday sales, mostly benefiting online retailers. 

So, what does all this mean for retail ETFs in December? 

Based upon year-to-date performance trends and an upbeat consumer, despite inflation, high credit card balances and potential for a slower economy in 2024, retail ETFs could see more gains during the most wonderful time of the year. 

Best Retail ETFs for the 2023 Holiday Season 

Year-to-date, the best retail ETFs, as measured by performance through Nov. 28, were funds that can benefit from 2023 online shopping trends like the Amplify Online Retail ETF (IBUY) and the ProShares Online Retail ETF (ONLN), which are up 25% and 17%, respectively. 

5 Best Retail ETFs of 2023 by Performance 

TickerFundAUMExpense RatioYTD Return
IBUYAmplify Online Retail ETF$177.90M0.65%24.99%
ONLNProShares Online Retail ETF$98.33M0.58%17.12%
ISHPFirst Trust S-Network E-Commerce ETF$5.39M0.60%14.18%
RTHVanEck Retail ETF$164.82M0.35%12.88%
EMTYProShares Decline of the Retail Store ETF$10.61M0.65%12.21%

Data as of November 28, 2023. Leveraged ETFs were not included in our search. 

Retail ETFs vs. Consumer-Discretionary ETFs 

In addition to retail ETFs, investors can benefit from strong consumer spending with consumer-discretionary ETFs, which may extend beyond brick-and-mortar retailers and e-commerce stocks and into other consumer-related industries, such as travel and leisure. The largest consumer discretionary ETF is the Consumer Discretionary Select Sector SPDR (XLY), which is up 32% this year. 

Here are some key differences between the retail industry and the consumer discretionary sector: 

Retail 

Retail is a subsector of the consumer-discretionary sector and may include industries such as apparel, home goods and health and beauty. Like some other consumer-discretionary industries, retail tends to be seasonal, meaning many retailers generate a significant part of their annual sales during the holiday season. Although November and December tend to be stronger months than others, the back-to-school season can also produce significant sales.  

Top retail stocks include: 

Consumer Discretionary 

Consumer-discretionary stocks are equity securities of companies involved in the production of non-essential goods and services. The consumer-discretionary sector includes industries, such as auto manufacturing, consumer retail, hotels and the travel and leisure industries.  

Also known as consumer cyclical stocks, consumer-discretionary stocks tend to be sensitive to economic cycles. For example, when the economy is growing and consumer sentiment is generally positive, consumers tend to spend more on goods and services they want but may not need, whereas they may spend less on these items in a slowing economy.  

Top consumer discretionary stocks include:  

Bottom Line on ETFs for the 2023 Holiday Season 

While there is no guarantee that certain stocks or sectors may perform better than others during or immediately following the holidays, retail ETFs and consumer-discretionary ETFs are good investments for betting on strong consumer spending. Because the behavior of consumers can be difficult to predict, a diversified ETF can help to reduce market risk associated with cyclical investments. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.