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5 Consumer Discretionary ETFs to Gift Your Valentine
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Valentine’s Day is around the corner and let’s do something different this year. While accessories, dresses, gadgets, flowers etc. have been popular gifts on this day, gifting an ETF could be a great idea. This is especially true as the stock market has been beaten down this year by Fed rates hike bets and inflationary pressures, making stocks attractive at the current levels (read: January Worst Month Since March 2020: ETF Areas Up 10% or More).
Additionally, solid Valentine’s Day spending expectations should provide fuel to the stock market and thus ETFs. This is expected to have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending. Investors seeking to capitalize on the Valentine’s Day expenditure should invest in consumer discretionary ETFs.
These funds — Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) and SPDR S&P Retail ETF (XRT - Free Report) — have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
Why Consumer Discretionary?
Americans are expected to shell out more this Valentine’s Day as the economy is recovering from the pandemic with the increased pace of vaccinations. Per the National Retail Federation, Americans will spend an average of $175.41 per person on Valentine’s Day gifts, up from $164.76 in 2021. Total spending is expected to reach $23.9 billion, up from $21.8 billion last year and the second-highest year on record behind the $27.48 billion spent in 2020.
More than half (53%) of Americans plan to celebrate Valentine's Day this year, up from 52% in 2021. Online continues to be the hot spot for Valentine’s Day shopping, visited by 41%, followed by department stores at 32%, discount stores at 28%, local small businesses at 18% and florists at 17%.
Candy (56%), greeting cards (40%) and flowers (37%) remain the most popular gift items this Valentine’s Day. About 31% of respondents plan to gift an “evening out” this year, up from 24% in 202 for a total of $4.3 billion. About 22% will opt to gift jewelry to a special someone. Total spending on jewelry is estimated at $6.2 billion, up from $4.1 billion in 2021 and the highest in the survey’s history.
Higher spending will help in driving economic growth, which is already on a solid path, and in turn boost consumer discretionary sector. The U.S. economy expanded 5.7% annually in 2021, marking the fastest pace of growth since 1984 and a sharp reversal from the GDP contraction of 3.4% recorded in 2020 (read: 5 ETFs to Tap the Four-Decade Strongest U.S. Economy).
Further, a higher interest rate is a positive for the consumer discretionary sector. This is because it means a stronger economy and a solid job market, which will create a “wealth effect,” resulting in higher consumer confidence.
ETFs to Buy
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 60 securities in its basket, Internet & direct marketing retail dominates about 24.7% of the portfolio, while automobiles, hotels, restaurants and leisure, and specialty retail round off the next three spots with a double-digit allocation each (read: ETFs to Buy on Amazon's Big Q4 Earnings Beat).
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $20.1 billion and an average daily volume of around 9.4 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Consumer Discretionary ETF follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. In terms of industrial exposure, Internet & direct marketing retail, automobile manufacturers and home improvement retail occupy the top spots with a double-digit exposure each.
Vanguard Consumer Discretionary ETF is the low choice in the space, charging investors only 10 bps in annual fees while volume is good at nearly 148,000 shares a day. The fund has managed about $6 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #2 with a Medium risk outlook.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 313 stocks in its basket. Internet & direct marketing retail makes up for the top sector, with 23.7% share, followed by specialty retail (20.4%) and hotels restaurants & leisure (17.2%).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.6 billion in its asset base while trading in a good volume of around 267,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 with a Medium risk outlook.
Invesco S&P SmallCap Consumer Discretionary ETF targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 87 securities in its basket with specialty retail taking the largest share at 34.6% while household durables, and hotels, restaurants and leisure account for a double-digit exposure each.
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $44.4 million in AUM and charges 29 bps in annual fees. It trades in an average daily volume of 4,000 shares and has a Zacks ETF Rank #2 with a High risk outlook.
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well-diversified 109 stocks in its basket. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in Internet & direct marketing retail, apparel retail, automotive retail and specialty stores (read: ETFs to Gain & Lose From Higher Oil Price).
SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $381.3 million and an average trading volume of 4.7 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #1.
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5 Consumer Discretionary ETFs to Gift Your Valentine
Valentine’s Day is around the corner and let’s do something different this year. While accessories, dresses, gadgets, flowers etc. have been popular gifts on this day, gifting an ETF could be a great idea. This is especially true as the stock market has been beaten down this year by Fed rates hike bets and inflationary pressures, making stocks attractive at the current levels (read: January Worst Month Since March 2020: ETF Areas Up 10% or More).
Additionally, solid Valentine’s Day spending expectations should provide fuel to the stock market and thus ETFs. This is expected to have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending. Investors seeking to capitalize on the Valentine’s Day expenditure should invest in consumer discretionary ETFs.
These funds — Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) and SPDR S&P Retail ETF (XRT - Free Report) — have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
Why Consumer Discretionary?
Americans are expected to shell out more this Valentine’s Day as the economy is recovering from the pandemic with the increased pace of vaccinations. Per the National Retail Federation, Americans will spend an average of $175.41 per person on Valentine’s Day gifts, up from $164.76 in 2021. Total spending is expected to reach $23.9 billion, up from $21.8 billion last year and the second-highest year on record behind the $27.48 billion spent in 2020.
More than half (53%) of Americans plan to celebrate Valentine's Day this year, up from 52% in 2021. Online continues to be the hot spot for Valentine’s Day shopping, visited by 41%, followed by department stores at 32%, discount stores at 28%, local small businesses at 18% and florists at 17%.
Candy (56%), greeting cards (40%) and flowers (37%) remain the most popular gift items this Valentine’s Day. About 31% of respondents plan to gift an “evening out” this year, up from 24% in 202 for a total of $4.3 billion. About 22% will opt to gift jewelry to a special someone. Total spending on jewelry is estimated at $6.2 billion, up from $4.1 billion in 2021 and the highest in the survey’s history.
Higher spending will help in driving economic growth, which is already on a solid path, and in turn boost consumer discretionary sector. The U.S. economy expanded 5.7% annually in 2021, marking the fastest pace of growth since 1984 and a sharp reversal from the GDP contraction of 3.4% recorded in 2020 (read: 5 ETFs to Tap the Four-Decade Strongest U.S. Economy).
Further, a higher interest rate is a positive for the consumer discretionary sector. This is because it means a stronger economy and a solid job market, which will create a “wealth effect,” resulting in higher consumer confidence.
ETFs to Buy
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 60 securities in its basket, Internet & direct marketing retail dominates about 24.7% of the portfolio, while automobiles, hotels, restaurants and leisure, and specialty retail round off the next three spots with a double-digit allocation each (read: ETFs to Buy on Amazon's Big Q4 Earnings Beat).
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $20.1 billion and an average daily volume of around 9.4 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. In terms of industrial exposure, Internet & direct marketing retail, automobile manufacturers and home improvement retail occupy the top spots with a double-digit exposure each.
Vanguard Consumer Discretionary ETF is the low choice in the space, charging investors only 10 bps in annual fees while volume is good at nearly 148,000 shares a day. The fund has managed about $6 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #2 with a Medium risk outlook.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 313 stocks in its basket. Internet & direct marketing retail makes up for the top sector, with 23.7% share, followed by specialty retail (20.4%) and hotels restaurants & leisure (17.2%).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.6 billion in its asset base while trading in a good volume of around 267,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 with a Medium risk outlook.
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report)
Invesco S&P SmallCap Consumer Discretionary ETF targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 87 securities in its basket with specialty retail taking the largest share at 34.6% while household durables, and hotels, restaurants and leisure account for a double-digit exposure each.
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $44.4 million in AUM and charges 29 bps in annual fees. It trades in an average daily volume of 4,000 shares and has a Zacks ETF Rank #2 with a High risk outlook.
SPDR S&P Retail ETF (XRT - Free Report)
SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid-and small-cap retail stocks. It holds well-diversified 109 stocks in its basket. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in Internet & direct marketing retail, apparel retail, automotive retail and specialty stores (read: ETFs to Gain & Lose From Higher Oil Price).
SPDR S&P Retail ETF is the largest and most popular in the retail space with AUM of $381.3 million and an average trading volume of 4.7 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #1.