Designed to provide broad exposure to the Consumer Discretionary - Broad segment of the equity market, the iShares U.S. Consumer Discretionary ETF (
IYC Quick Quote IYC - Free Report) is a passively managed exchange traded fund launched on 06/12/2000.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
The fund is sponsored by Blackrock. It has amassed assets over $696.54 million, making it one of the largest ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. IYC seeks to match the performance of the Dow Jones U.S. Consumer Services Index before fees and expenses.
The Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index measures the performance of the consumer services sector of the U.S. equity market.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.54%.
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 70.30% of the portfolio. Telecom and Consumer Staples round out the top three.
Looking at individual holdings, Amazon Com Inc (
AMZN Quick Quote AMZN - Free Report) accounts for about 13.30% of total assets, followed by Tesla Inc ( TSLA Quick Quote TSLA - Free Report) and Home Depot Inc ( HD Quick Quote HD - Free Report) .
The top 10 holdings account for about 42.17% of total assets under management.
Performance and Risk
Year-to-date, the iShares U.S. Consumer Discretionary ETF has lost about -28.05% so far, and is down about -28.95% over the last 12 months (as of 11/21/2022). IYC has traded between $55.58 and $86 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 26.93% for the trailing three-year period, making it a medium risk choice in the space. With about 179 holdings, it effectively diversifies company-specific risk.
IShares U.S. 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, IYC is a reasonable 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 $4.18 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.08 billion. VCR has an expense ratio of 0.10% and XLY charges 0.10%. Bottom Line
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