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ETFs Are Betting on a Divided America—and Walmart Is Winning

MarketDash Editorial Team
4 hours ago
The K-shaped economic recovery is real, and smart money is positioning accordingly. Portfolio manager Eric Clark explains why Walmart and Costco are thriving while lower-income shoppers struggle—and how ETFs are quietly picking winners in this split economy.

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Remember when everyone argued about whether the K-shaped recovery was real? Well, the debate is over. It's here, it's measurable, and exchange-traded funds are already placing their bets.

Eric Clark, portfolio manager of the Alpha Brands Consumption Leaders ETF (LOGO) and CIO at Accuvest Global Advisors, sees the divide playing out in real time. Higher-income households with appreciating homes and investment portfolios are spending comfortably. Lower-income consumers are a different story. "The upper part of the K, the higher-income (cohort) with real assets and homes, is doing pretty well and spending really well," Clark explained. "The small, the lower income cohorts, are struggling, because inflation is still present in a lot of parts of our lives."

That split is creating an interesting dynamic in consumer-focused funds. Broad retail sales data still looks decent, which helps explain why something like the Consumer Discretionary Select Sector SPDR Fund (XLY) continues trading near highs. But Clark points out that the strength isn't evenly distributed. "Consumers are being very choiceful," he said, emphasizing that discretionary spending now depends heavily on brand trust and perceived value.

The Value Retailers Are Cleaning Up

This pickier consumer behavior is a gift to value-oriented retailers, and ETF holdings reflect that reality. Funds with significant exposure to Walmart Inc (WMT), Costco Wholesale Corp (COST), and off-price chains are outperforming. The SPDR S&P Retail ETF (XRT) and VanEck Retail ETF (RTH) are increasingly powered by a concentrated group of value leaders rather than broad retail momentum. Clark is particularly bullish on Walmart. "We still love Walmart. It deserves to be part of the trillion-dollar club, and that probably happens in 2026," he said.

On the defensive side, consumer staples funds like the Vanguard Consumer Staples ETF (VDC) offer a hedge as lower-income households cut back. Clark flagged rising credit card usage as a warning sign, noting that some consumers are "using credit to fill the gap" as elevated prices persist.

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The Confidence Paradox

Here's where things get weird. Consumer confidence surveys are scraping historic lows while equity markets trade near record highs. "Consumer sentiment at all-time lows, with markets near all-time highs and retail sales still doing well, is a very odd phenomenon," Clark said. That kind of disconnect doesn't happen often, and it suggests something fundamental has shifted in how Americans experience the economy.

For ETF investors, the message is clear: "the consumer" isn't a monolithic category anymore. Active strategies like the LOGO ETF are focusing on companies that serve value-seeking shoppers while also capturing productivity gains from artificial intelligence. They're avoiding broad exposure to segments that could crumble if employment weakens.

Because ultimately, Clark says, it all comes down to jobs. "If you have a job and feel secure, you spend. If not, you become much more value-conscious, trying to save where possible while being more selective about discretionary purchases." The ETF world has clearly made its choice—it's betting on the winners of a divided economy, not hoping for a rising tide that lifts all boats.

ETFs Are Betting on a Divided America—and Walmart Is Winning

MarketDash Editorial Team
4 hours ago
The K-shaped economic recovery is real, and smart money is positioning accordingly. Portfolio manager Eric Clark explains why Walmart and Costco are thriving while lower-income shoppers struggle—and how ETFs are quietly picking winners in this split economy.

Get Costco Wholesale Alerts

Weekly insights + SMS alerts

Remember when everyone argued about whether the K-shaped recovery was real? Well, the debate is over. It's here, it's measurable, and exchange-traded funds are already placing their bets.

Eric Clark, portfolio manager of the Alpha Brands Consumption Leaders ETF (LOGO) and CIO at Accuvest Global Advisors, sees the divide playing out in real time. Higher-income households with appreciating homes and investment portfolios are spending comfortably. Lower-income consumers are a different story. "The upper part of the K, the higher-income (cohort) with real assets and homes, is doing pretty well and spending really well," Clark explained. "The small, the lower income cohorts, are struggling, because inflation is still present in a lot of parts of our lives."

That split is creating an interesting dynamic in consumer-focused funds. Broad retail sales data still looks decent, which helps explain why something like the Consumer Discretionary Select Sector SPDR Fund (XLY) continues trading near highs. But Clark points out that the strength isn't evenly distributed. "Consumers are being very choiceful," he said, emphasizing that discretionary spending now depends heavily on brand trust and perceived value.

The Value Retailers Are Cleaning Up

This pickier consumer behavior is a gift to value-oriented retailers, and ETF holdings reflect that reality. Funds with significant exposure to Walmart Inc (WMT), Costco Wholesale Corp (COST), and off-price chains are outperforming. The SPDR S&P Retail ETF (XRT) and VanEck Retail ETF (RTH) are increasingly powered by a concentrated group of value leaders rather than broad retail momentum. Clark is particularly bullish on Walmart. "We still love Walmart. It deserves to be part of the trillion-dollar club, and that probably happens in 2026," he said.

On the defensive side, consumer staples funds like the Vanguard Consumer Staples ETF (VDC) offer a hedge as lower-income households cut back. Clark flagged rising credit card usage as a warning sign, noting that some consumers are "using credit to fill the gap" as elevated prices persist.

Get Costco Wholesale Alerts

Weekly insights + SMS (optional)

The Confidence Paradox

Here's where things get weird. Consumer confidence surveys are scraping historic lows while equity markets trade near record highs. "Consumer sentiment at all-time lows, with markets near all-time highs and retail sales still doing well, is a very odd phenomenon," Clark said. That kind of disconnect doesn't happen often, and it suggests something fundamental has shifted in how Americans experience the economy.

For ETF investors, the message is clear: "the consumer" isn't a monolithic category anymore. Active strategies like the LOGO ETF are focusing on companies that serve value-seeking shoppers while also capturing productivity gains from artificial intelligence. They're avoiding broad exposure to segments that could crumble if employment weakens.

Because ultimately, Clark says, it all comes down to jobs. "If you have a job and feel secure, you spend. If not, you become much more value-conscious, trying to save where possible while being more selective about discretionary purchases." The ETF world has clearly made its choice—it's betting on the winners of a divided economy, not hoping for a rising tide that lifts all boats.