More often than not, the ongoing theme within the capital markets is that you can’t time the market’s movements. However, value investors were able to utilize time to their advantage by picking up retail names just before they took off.
According to the Commerce Department, retail sales, a measure of purchases at stores, at restaurants and online, rose a seasonally adjusted 17.7% in May, the highest month-over-month advance on record, the Wall Street Journal reports. Furthermore, this number greatly surpassed expectations of a 7.7% increase.
In this case, time was on the retail investors’ side. With the pandemic sell-offs in March doing a number on all sectors, value investors were quick to see an opportunity.
Per a Fortune article, retail investors’ outperformance was due “in part because they were quick to snap up value stocks as the rally gained traction. While high-quality growth stocks outperformed as the market tanked and in the first few weeks of the rebound—benefiting institutional investors who shifted to growth stocks amid the decline—since mid-May, the rally has shifted toward cyclicals, small-caps, and economically sensitive stocks, Goldman notes.
“Stocks with these qualities…were quickly embraced by value-seeking retail investors, and now make up a large portion of our retail basket,” strategists at Goldman write. The firm notes that broker data reveals a “tripling of retail trading activity as the market declined.”
For investors looking for retail options, they can consider the following:
- Amplify Online Retail ETF (IBUY ): seeks investment results that generally correspond to the price and yield of the EQM Online Retail Index. The index seeks to measure the performance of global equity securities of publicly traded companies with significant revenue from the online retail business. The index methodology is designed to result in a portfolio that has the potential for capital appreciation.
- SPDR S&P Retail ETF (XRT ): seeks to provide investment results that correspond generally to the total return performance of an index derived from the retail segment of a U.S. total market composite index. The index represents the retail segment of the S&P Total Market Index (“S&P TMI”).
- ProShares Online Retail ETF (ONLN): seeks investment results that track the performance of the ProShares Online Retail Index (the index). The index is designed to measure the performance of publicly traded companies that principally sell online or through other non-store sales channels, such as through mobile or app purchases, rather than through “brick and mortar” store locations.