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Walmart’s Latest Earnings Win Having Outsized Effects On Retail ETFs

Monday, February 27, 2017 9:46
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The recent surge in Wal-Mart Stores Inc (NYSE:WMT) post a well-received quarterly earnings report (it has rallied over 3.7% just in the past five days) has boosted the Retail Equity sector in general, especially those ETFs which have a considerable weighting to the stock.

WMT is the third largest single holding in the well-known RTH (VanEck Vectors Retail, Expense Ratio 0.35%, $96.5 million in AUM) at 6.22%, falling behind HD (8.19%), and AMZN (17.18%).

However, two other lesser known ETFs that are certainly not on every radar, carry larger exposures to WMT, and these funds are FTXD (First Trust Nasdaq Retail, Expense Ratio 0.60%, $2 million in AUM, WMT 8.51% weighting and #1 holding) and CNSF (iShares Edge MSCI Multifactor Consumer Staples, Expense Ratio 0.35%, $2.4 million in AUM, WMT 7.63% weighting and #2 holding).

Both funds are relatively new to the marketplace, with FTXD debuting late last September in 2016 and intending to deliver exposure to “The Nasdaq U.S. Smart Retail index” where the methodology is predicated on Nasdaq’s selection of “the 50 most liquid eligible retail securities from the NASDAQ U.S. Benchmark Index and then ranks those securities based on three factors: 1) Volatility – trailing 12-month price fluctuation 2) Value – cash flow to price 3) Growth – the 3,6, 9, and 12-month average price appreciation.”

CNSF on the other hand as its title suggests, is also a “smart beta” approach like FTXD in that it has a “Focus on proven drivers of return: inexpensive stocks, financially health firms, trending stocks, and relatively smaller companies.”

Both of these funds remain smaller and under-recognized thanks to their newness (2016 debuts) to the marketplace.

Wal-Mart Stores Inc (NYSE:WMT) was trading at $71.64 per share on Monday morning, down $0.75 (-1.04%). Year-to-date, WMT has gained 3.65%, versus a 5.97% rise in the benchmark S&P 500 index during the same period.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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