Retail ETFs Gear Up for Black Friday

The day after Thanksgiving is still the biggest shopping day of the year.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

Black Friday might not be as frenzied as it used to be, but it’s still the busiest shopping day of the all-important holiday season. Over the past decade, retailers have increasingly offered deep discounts to entice shoppers into stores, and that has had major impact on the overall economy.

The retail holiday has slowly turned into Black November, with retailers extending deep deals all month long, but the day after Thanksgiving is still considered to be the start of the coveted shopping season.

"It is a social thing. I think people will [participate in it] to be out there together,” Anthony Johnson, head of the real estate management company Pegasus Group, said in a news report.

Black Friday will be the busiest shopping day of the season, followed by the Friday before Christmas and the day after Christmas, according to forecasts from Sensormatic Solutions.

The National Retail Federation says that 166.3 million Americans will shop during Thanksgiving weekend—a period that spans from Thanksgiving to Cyber Monday. If accurate, that would surpass the pre-pandemic high of 165.3 million shoppers from 2019.

Separately, the NRF forecasts that retail sales during the holiday months of November and December will climb 6-8% over 2021 levels, faster than the 10-year average of 4.9%.

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“NRF’s holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity. Despite record levels of inflation, rising interest rates and low levels of confidence, consumers have been steadfast in their spending and remain in the driver’s seat,” NRF Chief Economist Jack Kleinhenz wrote in the report.

If that’s the case, it bodes well for retail ETFs. The SPDR S&P Retail ETF (XRT), the VanEck Retail ETF (RTH) and the Amplify Online Retail ETF (IBUY) have all fallen this year as investors questioned whether consumers would keep spending in the face of high inflation.

Year-to-date losses for the ETFs have ranged from 12% to 53%, the wide variation accounted for by the stark differences in the funds’ holdings.

 

XRT RTH IBUY 
NameWeightNameWeightName Weight 
Gap Inc.1.65%Jd.com Inc.3.90%Etsy Inc2.80%
American Eagle Outfitters Inc.1.60%Mckesson Corp3.86%Ebay Inc2.73%
Abercrombie & Fitch Co. Class A1.56%Dollar General Corp3.30%Chewy Inc2.72%
Victoria's Secret & Company1.52%Autozone Inc3.11%Expedia Group Inc2.68%
Macy's Inc1.44%Sysco Corp3.03%Copart Inc2.68%
Buckle Inc.1.44%Lululemon Athletica Inc2.55%Shutterstock Inc2.66%
ODP Corporation1.44%Ross Stores Inc2.49%Doordash Inc2.66%
Burlington Stores Inc.1.41%Dollar Tree Inc2.18%Overstock Inc2.64%
Urban Outfitters Inc.1.39%Walgreens Boots Alliance Inc2.05%Revolve Group Inc2.61%
Ross Stores Inc.1.37%Kroger Co.1.99%Chegg Inc2.60%

 

Barring a major setback in the broader markets, a strong holiday shopping season could be an upside catalyst for all three ETFs.

Next week, we’ll get a better sense of how the holiday shopping season is shaping up as data on sales and foot traffic during Thanksgiving weekend start to trickle out.

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.