Retail ETF Weakness Gives Way To Emerging Market ETF Strength
23 June 2010 at 3:51 pm by Gary Gordon
For the last few months, one exchange-traded fund kept making its way onto the WSJ.com’s “Selling On Strength” List. Specifically, each time that I checked money flow stats, it seemed as though SPDR Retail (XRT) had cracked the proverbial “Top 10.”
In fact, according to XTF.com, in fact, SPDR Retail (XRT) has the 4th largest net monthly outflows of more than 1000 exchange-traded vehicles. Assuming the reported $500 million exodus figure is accurate, XRT has lost more than 2/3 of its assets under management.
Keep in mind, at the April 23rd U.S. market top, Retail (XRT) had been one of the most remarkable 3-month, 6-month and 1 year performers around. With 1/3 allocated to apparel retailers like Nordstrom, Ross and American Eagle, investing in the discretionary spending of U.S. consumers was highly profitable.
Past tense, that is! Few investments have dropped as far and as quickly over the last 2 months.
Before unceremoniously burying the retailers, let’s recognize that XRT still remains above its 200-day trendline. One might also take a measure of comfort from upbeat employment trends that aren’t receiving any publicity and may yet have a positive impact on retail sales.
Still, I must admit… I’m not a fan of this fund at the moment. I’m more inclined to stick with Industrials (XLI) and Technology (XLK) when it comes to U.S. equities.
Even more noticably, there’s something developing in emerging markets again. A “soft economic landing” in China is looking far more certain than Europe engineering a soft landing for its debt crisis or the U.S. avoiding additional price declines in real estate.
It follows that China (PGJ) has climbed back above its long-term trendline. Better yet, emerging markets throughout the region from Thailand (THD) to Malaysia (EWM) to Singapore (EWS) have also responded favorably to potential appreciation of the yuan.
Even Vanguard Emerging Markets (VWO) has advanced. Are we seeing the stock torch being passed back to the developing world?
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Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company receives advertising compensation from Invesco PowerShares Capital Management, LLC and Geary Advisors, LLC. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
Tags | "etf retail" "retail etfs", "etf rotation", "etf sectors"
