DEFINITION of 'Retail Industry ETF'

An exchange-traded fund that invests in companies whose main business is selling retail merchandise to consumers, so as to replicate the performance of an underlying retail index. The companies included in such an ETF include brick-and-mortar retailers as well as online merchants, and span a wide range of industries.

BREAKING DOWN 'Retail Industry ETF'

The performance of a retail industry ETF is significantly correlated to the prevailing level of consumer confidence in the economy. Such an ETF will do well when the economy and consumer spending are robust, and will fare poorly when they are in the doldrums. Retail industry ETFs in the U.S. would generally include household names such as Wal-Mart and Target.

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