If you're interested in broad exposure to the Consumer Discretionary - Broad segment of the equity market, look no further than the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (
RCD Quick Quote RCD - Free Report) , a passively managed exchange traded fund launched on 11/01/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
The fund is sponsored by Invesco. It has amassed assets over $483.01 million, making it one of the larger ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. RCD seeks to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index before fees and expenses.
The S&P 500 Equal Weight Consumer Discretionary Index is an unmanaged equal weighted version of the S&P 500 Consumer Discretionary Index that consists of common stocks of companies that comprise the Consumer Discretionary Sector of the S&P 500 Index.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.39%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 100% of the portfolio.
Looking at individual holdings, Tesla Inc (
TSLA Quick Quote TSLA - Free Report) accounts for about 2.35% of total assets, followed by Ford Motor Co ( F Quick Quote F - Free Report) and Dollar Tree Inc ( DLTR Quick Quote DLTR - Free Report) .
The top 10 holdings account for about 18.84% of total assets under management.
Performance and Risk
So far this year, RCD has added roughly 26.58%, and was up about 27.97% in the last one year (as of 12/15/2021). During this past 52-week period, the fund has traded between $120.39 and $160.55.
The ETF has a beta of 1.40 and standard deviation of 29.17% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Invesco S&P 500 Equal Weight Consumer Discretionary ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RCD is a sufficient option for those seeking exposure to the Consumer Discretionary ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Consumer Discretionary ETF (
VCR Quick Quote VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF ( XLY Quick Quote XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $7.02 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $23.31 billion. VCR has an expense ratio of 0.10% and XLY charges 0.12%. Bottom Line
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