GME represented a stunning 20% weighting in XRT at yesterday's close -
Barron's -
The GameStop-heavy SPDR S&P Retail ETF shrunk considerably in size
Wednesday as authorized market makers redeemed about 70% of the shares
outstanding of the exchange-traded fund.
The shares outstanding stood at around 2.4 million at the close of
trading Wednesday, down from 8.15 million on Tuesday. The fund size stood at
about $237 million, according to State Street Global Advisors, which
oversees the ETF (ticker: XRT).
The market makers delivered more than 5.5 million shares of the ETF to
State Street Global Advisors and received the shares of the 95 companies in
the ETF including GameStop (GME), which represented 19.9% of the ETF at the
close of trading Wednesday. ETF shares can be redeemed or created at the
request of market makers.
It's not clear why there was such a big redemption of the fund on
Wednesday.
The XRT ETF was up nearly 2%, to $93.30, in early trading Thursday after
rising 12% Wednesday as GameStop surged 134%. GameStop was up about 9%, to
$379, in volatile early trading Thursday. The ETF is up 43% this year with
GameStop accounting for about 64% of the advance.
GameStop's 19.9% weighting in the ETF is up from about 1.5% at the start
of 2021, thanks to the surge in GameStop's share price from around $18 on
Dec. 31.
But its weighting in the ETF is due to fall sharply in mid-March, when
the fund undergoes its quarterly rebalancing.
The ETF is equal weighted, meaning that the 95 components are rebalanced
quarterly to each have a roughly 1% weighting. The fund's objective is to
provide broad exposure to the retailing sector.
The quarterly rebalancing occurs on March 19 -- the third Friday of the
final month of the quarter, according to S&P Dow Jones Indices. That means
that GameStop could be a major driver of the ETF for weeks to come. When the
rebalancing occurs, the ETF would sell enough GameStop stock to bring its
weighting down to 1%.
The next largest components of the ETF after GameStop are Blink Charging
(BLNK) and Magnite (MGNI) at around 1.5%.
Write to Andrew Bary at andrew.bary@barrons.com
