3 ETFs With a Large Allocation to Walmart Stock

When investors think of a multinational e-commerce company, Amazon.com, Inc. (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. However, traditional brick-and-mortar discount retailer Walmart Inc. (WMT) has been keeping pace online as well—maybe as Amazon's biggest threat. The retailer turned heads when it reported that its total online sales rose by 84% in the two years since the pandemic began, according to the company's annual filing.

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 enhanced the omnichannel experience with Walmart+, which includes unlimited shipping and delivery, exclusive discounts, and Paramount+ streaming service.

Walmart's rising online sales show that the company's investment in bolstering its online presence to compete with Amazon is paying dividends. Investors who want to exposure to Walmart should consider adding one of these three exchange-traded funds (ETFs) to their portfolio.

VanEck Retail ETF (RTH)

The VanEck Retail ETF (RTH) seeks to track 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 22.24%, Walmart still accounts for 9.25% of the fund's portfolio.

The VanEck Vectors Retail ETF has a 30-day SEC yield of 0.86% and has assets under management (AUM) of $151.6 million. The fund’s expense ratio of 0.35%. As of June 30, 2022, RTH has returned 14.74% over the past five years and 12.64% over the past three years. Lifetime returns, which benefited from robust consumer spending since 2011, returning an optimistic 15.62%.

Fidelity MSCI Consumer Staples ETF (FSTA)

Launched in 2013, the Fidelity MSCI Consumer Staples ETF (FSTA) 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 7.18% of the ETF's portfolio. Other top holdings include Procter & Gamble Company (PG) at 12.45% and beverage giants Coca-Cola Company (KO) and PepsiCo, Inc. (PEP) at 9.35% and 8.68%, respectively.

The Fidelity MSCI Consumer Staples ETF has $1.1 billion in net assets and charges investors a low annual management fee of just 0.08%. The fund has a three-year annualized return of 10.35% and a five-year annualized return of 8.35%, as of June 30, 2022. A dividend yield of 2.30% helps to offset the fund's lackluster performance.

Vanguard Consumer Staples ETF (VDC)

The Vanguard Consumer Staples ETF (VDC), 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 an 8.12% weighting. VDC's portfolio is top-heavy, with its top 10 holdings carrying a cumulative weighting of 61.13%. In total, the fund holds 100 stocks.

The Vanguard Consumer Staples ETF charges a 0.1% management fee and has a substantial asset base of $8 billion. It also paid two dividends as of June 28, 2022, one for 1.21% and the second for 0.74%. VDC has five- and three-year annualized returns of 8.3% and 10.28%, respectively, as of June 30, 2022. For lifetime, the fund has returned 9.73%.

Article Sources
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  1. U.S. Securities and Exchange Commission. "Walmart, Inc., Form 10-K, For the Fiscal Year Ended January 31, 2022," Page 78.

  2. Walmart Investor Relations. "16-Aug-2022, Walmart, Inc. (WMT), Q2 2023 Earnings Call," Page 4.

  3. MarketVector Indexes. "MVIS US Listed Retail 25 Index: Overview."

  4. VanEck. "VanEck Retail ETF (RTH): Overview."

  5. VanEck. "VanEck Retail ETF (RTH): Holdings."

  6. VanEck. "VanEck Retail ETF (RTH): Performance/Distributions," Select "Quarter End as of 06/30/22."

  7. Fidelity. "Fidelity MSCI Consumer Staples ETF (FSTA): Snapshot."

  8. Vanguard. "Vanguard Consumer Staples ETF (VDC)."

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