Have you ever found yourself at a Wal-Mart
Fortunately, if you're hankering to invest in a wide range of retailers, there's a solution: ETFs, more formally known as exchange-traded funds. They're strange beasts, part stock and part fund, and you can get a great introduction to them and why you should consider using them by visiting our ETF Center for more information.
The topic of retail ETFs came up on our ETF discussion board the other day, and ever-helpful Fool community members jbking and wcfenton offered these ETF investment suggestions:
iShares Dow Jones
Consumer Services Sector Index Fund
(AMEX:IYC). Its top 10 holdings make up about 35% of its value and include Wal-Mart, Home Depot, Time Warner, Disney, Walgreen, Viacom B (NYSE:VIAb), Lowe's, Target, McDonald's, and eBay. It's not exactly a retail pure play, but it does offer exposure to a wide variety of retailers. Its expense ratio (think annual fees) is 0.6%, and it includes stock in more than 252 companies.
Vanguard Consumer Discretionary VIPERs
(AMEX:VCR)are ETFs quite similar in composition to iShares Dow Jones US Consumer Services. Their expense ratio is considerably lower, though, at 0.28%. This ETF is invested in more than 400 companies.
(AMEX:RTH)offers a more concentrated exposure to retail, as it's invested in just 20 companies. The 20 are some of the biggest retailers trading in the U.S., all involved in retail. The holdings in Wal-Mart, Lowe's, and Home Depot make up about half of the entire fund's value, so you won't be in too much danger of overdiversification here. HOLDRs, offered from Merrill Lynch (NYSE:MER), require you to buy shares in lots of 100, which can disqualify them as an option for some people. The expense ratio is around $0.08 per share per year.
Learn more in our ETF Center and in these articles:
- Mutual Funds vs. ETFs
- Three Things to Know About Your ETF
- The Age of the Exchange-Traded Fund
- ETFs and Falling Fund Fees
And if you'd like to receive monthly recommendations of outstanding mutual funds, why not take advantage of a free trial of our Champion Funds newsletter? You have nothing to lose and a lot to gain. (Our newsletters' performance might surprise you.)
Longtime Fool contributor Selena Maranjian owns shares of Amazon.com, eBay, and Time Warner (all three of which are Motley Fool Stock Advisor recommendations), as well as shares of Home Depot (a Motley Fool Inside Value pick) and Wal-Mart. The Motley Fool has a disclosure policy .