Top 3 ETFs With a Large Allocation to Walmart Stock
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Top 3 ETFs With a Large Allocation to Walmart Stock

3 Min.

Basics

In multinational e-commerce enterprises, Amazon.com, Inc. (AMZN) often takes center stage. Originating as an online bookstore, the company has dominated the online commerce landscape for nearly two decades. However, Walmart Inc. (WMT), a traditional brick-and-mortar discount retailer, has quietly emerged as a significant challenger in the digital arena, posing a potential threat to Amazon.

In the aftermath of the pandemic, Walmart reported a remarkable 84% surge in its overall online sales, as disclosed in the company's annual filing. This shift underscores Walmart's commitment to adapting and excelling in e-commerce, potentially positioning it as Amazon's primary adversary.

To fortify its online presence, Walmart undertook strategic initiatives, including a website redesign expansion into international markets by acquiring Flipkart (India's largest e-commerce site) and introducing Walmart+, a comprehensive omnichannel service. Walmart+ offers unlimited shipping and delivery, exclusive discounts, and access to the Paramount+ streaming service.

The notable increase in Walmart's online sales validates the efficacy of its efforts to compete with Amazon. Investors seeking exposure to Walmart's potential should consider incorporating one of three exchange-traded funds (ETFs) into their portfolios.

VanEck Retail ETF (RTH)

Launched in 2011, the VanEck Retail ETF mirrors the MVIS US Listed Retail 25 Index, concentrating its investments in the key players of the American retail landscape. Specifically, the fund targets the 25 largest U.S-listed stocks, deriving a minimum of 50% of their revenue from the retail sector. Despite Amazon dominating the exposure with a substantial 22.24%, Walmart retains a significant presence, contributing 9.25% to the fund's portfolio. With a 30-day SEC yield of 0.86%, the VanEck Vectors Retail ETF manages assets worth $151.6 million and operates with an expense ratio of 0.35%.

Fidelity MSCI Consumer Staples ETF (FSTA)

Established in 2013, the Fidelity MSCI Consumer Staples ETF seeks to replicate the performance of the MSCI USA IMI Consumer Staples Index. This objective is achieved by dedicating a minimum of 80% of its assets to securities within the tracked index. The fund strategically invests in U.S. consumer staples, with Walmart comprising 7.18% of its portfolio. Other major holdings encompass Procter & Gamble Company (PG) at 12.45%, Coca-Cola Company (KO) at 9.35%, and PepsiCo, Inc. (PEP) at 8.68%. With a net asset value of $1.1 billion, the Fidelity MSCI Consumer Staples ETF boasts an impressively low annual management fee of 0.08%. 

Vanguard Consumer Staples ETF (VDC)

The Vanguard Consumer Staples ETF was created in 2004 to closely track the MSCI US Investable Market Consumer Staples 25/50 Index. The fund invests mainly in the constituent securities of the benchmark index, focusing on U.S. stocks in the consumer staples sector. Walmart secures the fifth-largest share in the ETF's stock assortment, representing an 8.12% allocation. With its top 10 holdings collectively contributing 61.13% to the portfolio, VDC maintains a well-structured basket of 100 stocks. Boasting a $8 billion asset base, the Vanguard Consumer Staples ETF commands a nominal 0.1% management fee. 

Conclusion

Walmart has emerged as a potent contender in e-commerce, challenging Amazon's dominance. With an 84% surge in online sales post-pandemic and strategic initiatives like website redesign and international expansion, Walmart signifies a transformative force. The VanEck Retail ETF (RTH), Fidelity MSCI Consumer Staples ETF (FSTA), and Vanguard Consumer Staples ETF (VDC) provide investors with avenues to capitalize on Walmart's digital prowess. This paradigm shift in retail dynamics presents a compelling investment narrative for those seeking exposure to Walmart's expanding online footprint.

Exchange-Traded Funds (ETFs)
VanEck Retail ETF (RTH)
Fidelity MSCI Consumer Staples ETF (FSTA)
Vanguard Consumer Staples ETF (VDC)
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