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Americans are growing optimistic about an economic recovery. This is especially true as the University of Michigan’s final sentiment index climbed to a pandemic high of 84.9 in late March from a preliminary reading of 83. Other measures of consumer confidence also seem to remain elevated. Consumer Confidence from the Conference Board is expected to rise to 96.9 in March from 91.3 in February and December’s low of 88.9.
The combination of a rapid pace of coronavirus vaccination and easing of business restrictions in many states are fueling consumer confidence. Additionally, the wave of unprecedented stimulus is acting as a huge catalyst for consumers to spend higher. Notably, consumer spending accounts for more than two-thirds of U.S. economic activity.
Further, the economy is poised to log its best performance in 37 years, thanks to the White House’s massive $1.9 trillion pandemic relief package and increased vaccinations against the coronavirus. The Federal Reserve expects much stronger growth this year, raising GDP growth projection from 4.2% to 6.5% for this year — the fastest since 1984. An improving economy will continue to lift consumer confidence (read: 4 Sectors & Their ETFs Offering Great Value Now).
Rising consumer confidence bodes well for household spending in the coming months and is expected to have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending. As such, investors could tap the encouraging trend in the basket form through consumer discretionary ETFs. Below, we have highlighted five of these that target the broad consumer market and are enjoying strong momentum this year.
With AUM of $537.9 million, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 102 securities in its basket with key holdings in Internet & direct marketing retail, automotive retail, apparel retail, and specialty stores. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy). It has gained 35.5% so far this year.
The fund targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 91 securities in its basket with specialty retail taking the largest share at 34.3% while household durables, hotels, restaurants and leisure, and textile, apparel & luxury goods account for a double-digit exposure each. The product has attracted $99.7 million in AUM and charges 29 bps in annual fees. It carries a Zacks ETF Rank #2 and has gained 33.7% this year (read: 1-Year Tour From Market Crash to Boom: 5 Top ETFs).
This ETF debuted last June and has attracted $503 million in AUM. It is designed to offer investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. Sportsbook comprises 33.3% share while iGaming and technology round off the next two spots with double-digit exposure each. The fund holds 40 stocks in its basket and charges 75 bps in annual fees. It trades in an average daily volume of 519,000 shares and is up 17.8% so far this year.
This ETF offers equal-weight exposure to companies in the consumer discretionary sector by tracking the S&P 500 Equal Weight Consumer Discretionary Index. It holds 64 securities in the basket. The product has amassed $856.2 million in its asset base and charges 40 bps in annual fees from investors. It trades in an average daily volume of 137,000 shares. The fund has a Zacks ETF Rank #3 and has added nearly 14% this year.
Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)
This fund offers exposure to companies that are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries by tracking the Dynamic Leisure and Entertainment Intellidex Index. It holds a small basket of 32 stocks with AUM of $1.9 billion and an average trading volume of 810,000 shares per day. PEJ charges 63 bps in annual fees and has a Zacks ETF Rank #3. It is up 13.3% so far this year (read: 10 Sector ETFs Flying Higher on a Recovering Economy).
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5 ETFs to Ride on Rising Consumer Confidence
Americans are growing optimistic about an economic recovery. This is especially true as the University of Michigan’s final sentiment index climbed to a pandemic high of 84.9 in late March from a preliminary reading of 83. Other measures of consumer confidence also seem to remain elevated. Consumer Confidence from the Conference Board is expected to rise to 96.9 in March from 91.3 in February and December’s low of 88.9.
The combination of a rapid pace of coronavirus vaccination and easing of business restrictions in many states are fueling consumer confidence. Additionally, the wave of unprecedented stimulus is acting as a huge catalyst for consumers to spend higher. Notably, consumer spending accounts for more than two-thirds of U.S. economic activity.
Further, the economy is poised to log its best performance in 37 years, thanks to the White House’s massive $1.9 trillion pandemic relief package and increased vaccinations against the coronavirus. The Federal Reserve expects much stronger growth this year, raising GDP growth projection from 4.2% to 6.5% for this year — the fastest since 1984. An improving economy will continue to lift consumer confidence (read: 4 Sectors & Their ETFs Offering Great Value Now).
Rising consumer confidence bodes well for household spending in the coming months and is expected to have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending. As such, investors could tap the encouraging trend in the basket form through consumer discretionary ETFs. Below, we have highlighted five of these that target the broad consumer market and are enjoying strong momentum this year.
SPDR S&P Retail ETF (XRT - Free Report)
With AUM of $537.9 million, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 102 securities in its basket with key holdings in Internet & direct marketing retail, automotive retail, apparel retail, and specialty stores. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy). It has gained 35.5% so far this year.
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report)
The fund targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 91 securities in its basket with specialty retail taking the largest share at 34.3% while household durables, hotels, restaurants and leisure, and textile, apparel & luxury goods account for a double-digit exposure each. The product has attracted $99.7 million in AUM and charges 29 bps in annual fees. It carries a Zacks ETF Rank #2 and has gained 33.7% this year (read: 1-Year Tour From Market Crash to Boom: 5 Top ETFs).
Roundhill Sports Betting & iGaming ETF (BETZ - Free Report)
This ETF debuted last June and has attracted $503 million in AUM. It is designed to offer investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. Sportsbook comprises 33.3% share while iGaming and technology round off the next two spots with double-digit exposure each. The fund holds 40 stocks in its basket and charges 75 bps in annual fees. It trades in an average daily volume of 519,000 shares and is up 17.8% so far this year.
Invesco S&P 500 Equal Weight Consumer Discretionary ETF
This ETF offers equal-weight exposure to companies in the consumer discretionary sector by tracking the S&P 500 Equal Weight Consumer Discretionary Index. It holds 64 securities in the basket. The product has amassed $856.2 million in its asset base and charges 40 bps in annual fees from investors. It trades in an average daily volume of 137,000 shares. The fund has a Zacks ETF Rank #3 and has added nearly 14% this year.
Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)
This fund offers exposure to companies that are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries by tracking the Dynamic Leisure and Entertainment Intellidex Index. It holds a small basket of 32 stocks with AUM of $1.9 billion and an average trading volume of 810,000 shares per day. PEJ charges 63 bps in annual fees and has a Zacks ETF Rank #3. It is up 13.3% so far this year (read: 10 Sector ETFs Flying Higher on a Recovering Economy).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>