3 ETFs With a Large Allocation to Walmart Stock

When investors think of a multinational e-commerce company, Amazon.com, Inc. (NASDAQ: AMZN) is the name that generally first comes to mind. The company, which initially opened as an online bookstore, has been at the forefront of online commerce for the better part of two decades. Therefore, traditional brick-and-mortar  discount retailer Walmart Inc. (NYSE: WMT) turned heads when it reported that its online sales rose by 40% in the second quarter of 2018, while also reiterating expectations of a 40% increase in e-commerce sales for the full year.

To increase its online sales, Walmart has improved its website design, pushed into international markets by purchasing Flipkart, India's largest e-commerce site, and added additional shipping options to make buying online more convenient for shoppers. Marc Lore, head of Walmart's U.S. e-commerce business, said that brands are more interested in selling on Walmart.com now that the website is easier for shoppers to navigate and has localized touches, according to a CNBC article. (For more, see also: Walmart Buying 77% Stake in Flipkart for $16 Billion.)

Walmart's rising online sales show that the company's investment in bolstering its online presence to compete with Amazon is paying dividends. The retailing giant's share price is also looking bullish from a technical analysis perspective. It broke out from a rounding bottom chart pattern and closed well above its 200-day moving average on Aug. 16,  2018 – the day the company reported its earnings. Investors who want to exposure to Walmart should consider adding one of these three exchange-traded funds (ETFs) to their portfolio. (See also: How Walmart Is Beating Amazon at Its Own Game)

The VanEck Vectors Retail ETF seeks to track the performance of the MVIS US Listed Retail 25 Index. To achieve this, the fund, created in 2011, invests the majority of its assets in securities that make up the underlying index. This includes the 25 largest U.S-listed stocks that generate at least 50% of their revenue from retail. Although Amazon commands the lion's share of exposure at 20.78%, Walmart still accounts for 9.17% of the fund's portfolio.

The VanEck Vectors Retail ETF pays a 1.39% dividend and has assets under management (AUM) of $94.94 million. The fund’s expense ratio of 0.35% is lower than the 0.53% category average. As of August 2018, RTH has returned 14.81% over the past five years and 11.38% over the past three years. Year to date (YTD), the fund has benefited from robust consumer spending, returning an impressive 12.75%. This compares to the broader market's (S&P 500) return of 6.6% over the same period. (See also: Top 4 Walmart Shareholders.)

Launched in 2013, the Fidelity MSCI Consumer Staples ETF aims to provide similar returns to the MSCI USA IMI Consumer Staples Index. The fund does this by investing a minimum of 80% of its assets in securities that are constituents of the tracked index. The fund holds stocks in the U.S. consumer staples sector, with Walmart making up 7.96% of the ETF's portfolio. Other top holdings include The Procter & Gamble Company (NYSE: PG) at 11.49% and beverage giants The Coca-Cola Company (NYSE: KO) and PepsiCo, Inc. (NYSE: PEP) at 10.2% and 8.83%, respectively.

The Fidelity MSCI Consumer Staples ETF has $286.11 million in net assets and charges investors a low annual management fee of just 0.08%. This above average-risk-rated fund has underperformed RTH. FSTA has a three-year annualized return of 4.92% and a disappointing YTD return of -4.28% as of August 2018. A dividend yield of 2.71% helps to offset the fund's lackluster performance. (See also: Walmart Stock Could Be Set Up for Major Rally.)

The Vanguard Consumer Staples ETF, formed in 2004, is designed to replicate the returns of the MSCI US Investable Market Consumer Staples 25/50 Index. The fund achieves this by investing the majority of its assets in securities that comprise the benchmark index, namely U.S. stocks within the consumer staples sector. Walmart claims the fifth largest allocation in the ETF's basket of stocks with a 6.98% weighting. VDC's portfolio is top heavy, with its top 10 holdings carrying a cumulative weighting of 63.2%. In total, the fund holds 94 stocks.

The Vanguard Consumer Staples ETF charges a 0.1% management fee and has a substantial asset base of $4.5 billion. It also pays a 2.58% dividend. VDC has five- and three-year annualized returns of 8.21% and 5.04%, respectively, as of August 2018. YTD, the fund has returned -3.63%. (The Four Rs of Investing in Retail.)