Market Overview

3 ETFs For Black Friday

3 ETFs For Black Friday

The annual tradition known as Black Friday is one of the ultimate tests of consumer strength. That test could be particularly important this year, as the Conference Board's October reading of consumer confidence showed a fourth straight monthly decline.

Still, there is a sense of optimism heading into this Black Friday. The SPDR S&P Retail ETF (NYSE: XRT), an exchange traded fund that's home to a slew of challenged brick-and-mortar companies, is higher by almost 4% over the past week. That's saying something, because online retail continues pilfering sales and market share from physical stores.

On the other hand, Black Friday is overrated: retailers have been running Black Friday sales for a few weeks now, and the day will account for just 48% of the $68 billion expected to be spent between Thanksgiving and Sunday, Dec. 1. That's down from 60% in 2000.

But for investors who want to participate in some Black Friday cheer, the following ETFs make sense.

VanEck Vectors Retail ETF 

The VanEck Vectors Retail ETF (NYSE: RTH) has enjoyed an impressive 2019, rising nearly 29% in a sign that structure very much matters with retail funds. The “secret” to RTH's success is a weight of 19.57% to shares of (NASDAQ: AMZN), one of the largest allocations to the e-commerce juggernaut among U.S.-listed ETFs.

Additionally, the brick-and-mortar stores on RTH's radar are not only survivors in the retail shake-out, but thrivers. In addition to Amazon, RTH's top 10 holdings — a group representing 72% of the fund's weight — include Home Depot (NYSE: HD), Walmart (NYSE: WMT) and Costco (NASDAQ: COST).

RTH is home to just 25 stocks, but that focused lineup works in favor of investors; none of the fund's truly important holdings are in danger of disappearing as more shoppers move online.

Amplify Online Retail ETF 

The Amplify Online Retail ETF (NASDAQ: IBUY) obviously merits a place on a list of Cyber Monday ETFs, but due to the blurring between that day and Black Friday, we'll include it here. Plus, IBUY's 5.39% gain over the past week is hard to ignore.

“Historically important shopping days such as Gray Thursday, Black Friday and Cyber Monday are less of an extravaganza than they were in the past, as shoppers can easily find deals outside of this timeframe,” according to Markit.

“Much of this is owed to the growing accessibility of e-commerce and mobile shopping; retailers have realized that to compete for sales, they need to offer discounts early and often.”

Additionally, IBUY isn't heavily allocated to Amazon. That's somewhat surprising given the posturing of this fund, but it's a plus for investors looking to pair IBUY with Amazon shares or an ETF that's heavy on that stock.

Invesco Dynamic Retail ETF 

The Invesco Dynamic Retail ETF (NYSE: PMR) offers a unique approach to a basket of stocks that mostly fall under the classification of traditional retailers.

PMR follows the Dynamic Retail Intellidex Index, which “thoroughly evaluates companies based on a variety of investment merit criteria, including: price momentum, earnings momentum, quality, management action, and value,” according to Invesco.

Roughly 44% of the fund's 30 holdings are classified as value stocks. PMR is up almost 3% over the past week.

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