ETFs with holdings in Macy’s: How should I invest?

Sales for department stores such as Macy’s Inc. (M), J.C. Penney Company, Inc. (JCP), Kohl’s Corporation (KSS), and Sears Holdings Corporation (SHLD) have been disappointing over the past few years. This is due largely to the emergence of online retailers and to cautious spending by consumers.

Consumer discretionary ETFs provide exposure across department stores and other retailers.

Consumer discretionary ETFs provide exposure to companies that deal in nonessentials such as apparel, consumer electronics, accessories, and footwear. Let’s look at some ETFs with holdings in Macy’s.

One of the most popular ETFs in this category is the Consumer Discretionary Select Sector SPDR Fund (XLY), which had 6.26% holdings as of January 30, 2015, in multiline retailers such as Macy’s. The fund had assets under management (or AUM) of $8.70 billion as of January 30, 2015, and an expense ratio of 0.16%.

The First Trust Consumer Discretionary AlphaDEX Fund (FXD) has 9.06% holdings in multiline retailers. It has $1.67 billion AUM and an expense ratio of 0.70%. The Vanguard Consumer Discretionary ETF (VCR) has $1.46 billion assets under management and an expense ratio of 0.12%. As of January 30, 2015, XLY, FXD, and VCR had 1.03%, 0.77%, and 0.79% in Macy’s, respectively. Unlike its peers J.C. Penney and Kohl’s, Macy’s has been able to outperform these ETFs over a five-year period.

Macy’s is also part of several broad market ETFs, including the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index. Other broad market ETFs include the iShares Dow Jones U.S. ETF (IYY) and the iShares Russell 3000 ETF (IWV).

Macy’s is also a part of the SPDR S&P Retail ETF (XRT), which tracks the S&P Retail Select Industry Index.

You can read our page on ETFs for more information.