Two under-the-radar ways to play a retail revival
Retail stocks are getting rocked in the fallout of the trade war.
The XRT retail ETF, an equal-weighted fund that gives the same gravity to Amazon AMZN as it does smaller retailers such as J.C. Penney JCP , has tumbled 7% this month as trade tensions ratcheted higher, nearly double the losses on the S&P 500.
Mary Ann Bartels, head of exchange-traded fund strategy at Bank of America, prefers another way to gain exposure to the retail sector and resilient U.S. consumer.
"This has been a dislocated market for several years, it's probably going to stay a little bit more dislocated but it doesn't mean that you don't want to be in the space. So we want to take a more diversified approach," Bartels told CNBC's " ETF Edge " on Monday. "We'd rather have broad consumer discretionary exposure and diversify."
To trade on this broader consumer theme, Bartels likes the IYC U.S. Consumer ETF, which has fallen this month but no worse than the broader market.
"That brings in a bunch of retailers in addition to manufacturers of consumer goods," Dave Nadig, managing director of ETF.com, said of the market-cap weighted index. The ETF's top holdings include Amazon, Disney, Comcast, Home Depot, and McDonald's.
For investors more bullish on the booming online space, Nadig says the CLIX ProShares long online/short stores ETF fits the bill. This ETF is 100% long stocks whose companies generate all sales online, and 50% short brick-and-mortar retailers.
"It's classic pairs trading," said Nadig. You like Coke versus Pepsi — you go long Coke, short Pepsi. That's really what this strategy is doing. It's just doing it in the whole space. I think it's a very interesting way to put money where your mouth is. It gives you a little bit of insurance if the whole retail sector continues to be flat."
The CLIX ETF has fallen 3% this month. However, for the full year, it has soared 22% and bested the S&P 500's 13% gain.
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.
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