A smart beta exchange traded fund, the State Street SPDR S&P Retail ETF (XRT) debuted on 06/19/2006, and offers broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street Investment Management, and has been able to amass over $436.49 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the S&P Retail Select Industry Index before fees and expenses.
The S&P Retail Select Industry Index represents the retail sub-industry portion of the S&P TMI. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Retail Index is a modified equal weight index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for XRT are 0.35%, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
XRT's heaviest allocation is in the Consumer Discretionary sector, which is about 78.7% of the portfolio. Its Consumer Staples and Energy round out the top three.
Taking into account individual holdings, Victoria S Secret + Co (VSXY) accounts for about 2.43% of the fund's total assets, followed by Sonic Automotive Inc Class A (SAH) and Grocery Outlet Holding Corp (GO).
Its top 10 holdings account for approximately 17.95% of XRT's total assets under management.
Performance and Risk
Year-to-date, the State Street SPDR S&P Retail ETF return is roughly 4.93% so far, and it's up approximately 13.55% over the last 12 months (as of 07/16/2026). XRT has traded between $77.28 $90.88 in this past 52-week period.
XRT has a beta of 1.16 and standard deviation of 22.05% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 76 holdings, it effectively diversifies company-specific risk .
Alternatives
State Street SPDR S&P Retail ETF is not a suitable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Amplify Online Retail ETF (IBUY) tracks EQM Online Retail Index and the VanEck Retail ETF (RTH) tracks MVIS US Listed Retail 25 Index. Amplify Online Retail ETF has $112.05 million in assets, VanEck Retail ETF has $250.81 million. IBUY has an expense ratio of 0.65% and RTH changes 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs
Bottom Line
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State Street SPDR S&P Retail ETF (XRT): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).