Get ready to spend a little of your fun money as I assemble an exchange-traded fund (ETF) portfolio that in addition to being remarkably diversified, will also own retail stocks from every continent except Antarctica, which the last time I checked, didn't have any publicly traded companies. In just six holdings, Here's everything you need for a global retail portfolio.

IN PICTURES: 10 Reasons To Add ETFs To Your Portfolio

The largest European retailer is also the second largest global retailer. France's Carrefour Group operates four different grocery store formats in 34 countries. With more than 475,000 employees serving a network of 15,500 stores, it's a force to be reckoned with. In the first six months of 2010, constant dollar revenues grew by 1.5% (excluding gas), an excellent performance, considering the European economy. One of the best way to play Carrefour is to buy the SPDR Euro Stoxx 50 ETF (NYSE:FEZ), which tracks an index comprised of 50 of Europe's biggest companies.

Seven & I Holdings Co. is Asia's largest retailer with 2010 revenues of $62.8 billion. Although most investors associate it with the Seven-Eleven convenience store chain, it's actually much more. Seven-Eleven stores account for 38.3% of revenues, Ito-Yokado superstores another 39.2% and department stores the bulk of the remainder. It has its hands in many pies in both Asia and other parts of the world, including North America, where its U.S. subsidiary is currently exploring a possible deal to buy Casey's General Stores (Nasdaq:CASY).

Canadian convenience store operator Alimentation Couche-Tard abandoned its bid for Casey's at the end of September, and Seven-Eleven will likely (if they're smart) do the same now that Casey's is loaded with debt. My recommendation is the WisdomTree Japan Hedged Equity Fund (NYSE:DJX), which tracks the index of the same name. Seven & I Holdings is the 17th biggest position in the ETF out of a total of 300 stocks. I like this ETF because equities in Japan are cheap right now and with the Japanese government stepping in to halt the appreciation of the yen, it should help the hedged ETF.

Woolworth's is the world's 22nd largest retailer with 2010 revenues of $51.6 billion. In addition to its supermarkets, it operates liquor stores, electronics stores, gas stations, hotels and home improvement centers. Although similarly named, it's not related to the former F.W. Woolworth Company. In terms of ETFs, the best I can do as far as including other parts of Asia is to suggest the WisdomTree Pacific ex-Japan Total Dividend Fund (NYSE:DND), which has 27% of its holdings invested in Hong Kong and another 11% in Singapore, in addition to the 62% from Australia and New Zealand. If you must, add an emerging market ETF to acquire China, India and Russia.

It shouldn't come as a surprise that a grocery store chain is Africa's largest retailer. All six continents have grocery-driven businesses at the top of the list, including Shoprite Holdings of South Africa. The retailer had an excellent fiscal 2010, with a revenues increase of 13.6% year-over-year. Most impressive is its 41.9% return on equity. And it's still growing.

However, Walmart (NYSE:WMT), the world's largest retailer, recently made a $4.1 billion offer for MassMart, a competitor in South Africa. The best ETF owning Shoprite is the SPDR S&P Emerging Middle East & Africa ETF (NYSE:GAF), which tracks the S&P Mid-East and Africa BMI Index. Shoprite is the tenth largest holding in a portfolio that is primarily comprised of South African companies, with a few Egyptian and Moroccan stocks thrown in for good measure. It's not what I'd call a complete representation of Africa but it'll do.

South America
Supermarkets once again lead the way with Grupo Pao de Acucar, a Brazilian retailer whose 2009 annualized revenues were $28 billion. It's in a heated battle with both Carrefour and Walmart in Brazil, where the three companies share almost 40% of the market. With 300 stores opening in the next three years, which should provide an estimated 8% in annual revenue growth, Grupo Pao de Acucar has a bright future.

Its stock trades on the New York Stock Exchange as an ADR so there is a direct way of investing but since we've been looking at ETFs, my suggestion is the SPDR S&P Emerging Latin America ETF (NYSE:GML), which gives you exposure to Brazil, Mexico, Chile and Peru and the 107 large cap stocks that come with it.

North America
Sam Walton would hardly recognize his company today. The world's largest retailer never seems to be able to avoid controversy. Most recently, it dropped its profit-sharing plan that contributed as much as 4% extra to employee pay and replaced it with a 6% 401(k) match. This might be good for shareholders in the short term but it will backfire in the long term. Whatever it does, people will keep shopping there. My recommendation is that you buy Merrill Lynch Retail HOLDRs (NYSE:RTH), a trust that owns 18 retail stocks, including Walmart.

Bottom Line
With the use of six exchange-traded funds, you have global exposure to retail while maintaining a diversified portfolio. (To take full advantage of these vehicles, you need to know how they can fulfill certain strategies. Check out How To Use ETFs In Your Portfolio.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  2. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  3. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  4. Mutual Funds & ETFs

    Top 5 Chinese Mutual Funds

    Learn about some of the most popular and best performing mutual funds that offer investors exposure to the important emerging market economy of China.
  5. Mutual Funds & ETFs

    ETF Analysis: Schwab US Large-Cap

    Discover how the Schwab U.S. Large-Cap exchange-traded fund is managed, the index it tracks and the investors for which it is most appropriate.
  6. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
  7. Investing Basics

    Explaining Unrealized Gain

    An unrealized gain occurs when the current price of a security exceeds the price an investor paid for the security.
  8. Investing Basics

    Explaining Risk-Adjusted Return

    Risk-adjusted return is a measurement of risk for an investment or portfolio.
  9. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  10. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth ...
  4. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  5. Systematic Manager

    A manager who adjusts a portfolio’s long and short-term positions ...
  6. Unconstrained Investing

    An investment style that does not require a fund or portfolio ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!