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Higher Spending to Boost Consumer Discretionary ETFs
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Americans are in good shape with higher spending and rising confidence, indicating a resilient economy. This is especially true as consumer spending increased the most in nearly two years in January amid a surge in wage gains. Rising spending bodes well for the consumer discretionary sector.
As such, investors could tap the encouraging trend in the basket form through consumer discretionary ETFs like Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) , Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) and iShares U.S. Consumer Services ETF (IYC - Free Report) . These funds have a Zacks ETF Rank #1 (Strong Buy), 2 (Buy) or # (Hold), suggesting their strong performance in the months ahead (read: Is Fed Rate Hike Worry Exaggerated? Top-Ranked ETFs to Play).
Consumer spending, which accounts for more than two-thirds of the economic activity, rose 1.8% last month, marking the largest increase since March 2021. This is a sharp reversal from a small spending decline in December. Adjusted for inflation, consumer spending increased 1.1%. This also reprensts the biggest gain since March 2021.
Higher purchases of long-lasting manufactured goods like motor vehicles, household furnishings and equipment, as well as recreational goods and vehicles, drove spending higher. Consumers also spent more on dining out and recreation. This indicates that the economy is nowhere near a recession.
Robust data came on the heels of solid wage gains. Wages and salaries grew 0.9% in January, more than twice as fast as in the prior month. Minimum wage increases and other annual raises kick in for many workers in January (read: 4 ETFs to Tap on Solid Q4 GDP Numbers).
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 56 securities in its basket, with key holdings in Internet & direct marketing retail, specialty retail, hotels, restaurants and leisure, and automobiles with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most-popular product in this space, with AUM of $14 billion and an average daily volume of around 4.5 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #1 with a Medium risk outlook.
Vanguard Consumer Discretionary ETF follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 308 stocks in its basket. In terms of industrial exposure, Internet & direct marketing retail, automobile manufacturers and restaurants occupy the top three spots.
Vanguard Consumer Discretionary ETF is the low-cost choice in the space, charging investors only 10 bps in annual fees while volume is good at nearly 128,000 shares a day. The fund has managed $4 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #1 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 86 securities in its basket, with specialty retail taking the largest share at 36.4%, while household durables, and hotels, restaurants and leisure account for double-digit exposure each (read: 5 Small-Cap ETFs Outperforming Russell 2000).
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $26.7 million in AUM and charges 30 bps in annual fees. It trades in an average daily volume of about 2,000 shares and has a Zacks ETF Rank #1 with a High risk outlook.
Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)
Invesco Dynamic Leisure and Entertainment ETF offers exposure to companies that are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries. It tracks the Dynamic Leisure and Entertainment Intellidex Index and holds 31 stocks in its basket.
Invesco Dynamic Leisure and Entertainment ETF has amassed $476 million in its asset base and has 0.55% in expense ratio. PEJ trades in a paltry volume of 114,000 shares per day on average and has a Zacks ETF Rank #2 with a High risk outlook.
iShares U.S. Consumer Discretionary ETF offers exposure to U.S. companies that distribute food, drugs, general retail items and media by tracking the Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index. It holds 173 stocks in its basket, with key holdings in retailing, consumer services, media & entertainment, and autos & components.
iShares U.S. Consumer Discretionary ETF has amassed $725.3 million in its asset base, and trades in a moderate volume of 108,000 shares a day on average. It charges 39 bps in annual fees from investors.
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Higher Spending to Boost Consumer Discretionary ETFs
Americans are in good shape with higher spending and rising confidence, indicating a resilient economy. This is especially true as consumer spending increased the most in nearly two years in January amid a surge in wage gains. Rising spending bodes well for the consumer discretionary sector.
As such, investors could tap the encouraging trend in the basket form through consumer discretionary ETFs like Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report) , Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) and iShares U.S. Consumer Services ETF (IYC - Free Report) . These funds have a Zacks ETF Rank #1 (Strong Buy), 2 (Buy) or # (Hold), suggesting their strong performance in the months ahead (read: Is Fed Rate Hike Worry Exaggerated? Top-Ranked ETFs to Play).
Consumer spending, which accounts for more than two-thirds of the economic activity, rose 1.8% last month, marking the largest increase since March 2021. This is a sharp reversal from a small spending decline in December. Adjusted for inflation, consumer spending increased 1.1%. This also reprensts the biggest gain since March 2021.
Higher purchases of long-lasting manufactured goods like motor vehicles, household furnishings and equipment, as well as recreational goods and vehicles, drove spending higher. Consumers also spent more on dining out and recreation. This indicates that the economy is nowhere near a recession.
Robust data came on the heels of solid wage gains. Wages and salaries grew 0.9% in January, more than twice as fast as in the prior month. Minimum wage increases and other annual raises kick in for many workers in January (read: 4 ETFs to Tap on Solid Q4 GDP Numbers).
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 56 securities in its basket, with key holdings in Internet & direct marketing retail, specialty retail, hotels, restaurants and leisure, and automobiles with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most-popular product in this space, with AUM of $14 billion and an average daily volume of around 4.5 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #1 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 308 stocks in its basket. In terms of industrial exposure, Internet & direct marketing retail, automobile manufacturers and restaurants occupy the top three spots.
Vanguard Consumer Discretionary ETF is the low-cost choice in the space, charging investors only 10 bps in annual fees while volume is good at nearly 128,000 shares a day. The fund has managed $4 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #1 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 86 securities in its basket, with specialty retail taking the largest share at 36.4%, while household durables, and hotels, restaurants and leisure account for double-digit exposure each (read: 5 Small-Cap ETFs Outperforming Russell 2000).
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $26.7 million in AUM and charges 30 bps in annual fees. It trades in an average daily volume of about 2,000 shares and has a Zacks ETF Rank #1 with a High risk outlook.
Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)
Invesco Dynamic Leisure and Entertainment ETF offers exposure to companies that are principally engaged in the design, production or distribution of goods or services in the leisure and entertainment industries. It tracks the Dynamic Leisure and Entertainment Intellidex Index and holds 31 stocks in its basket.
Invesco Dynamic Leisure and Entertainment ETF has amassed $476 million in its asset base and has 0.55% in expense ratio. PEJ trades in a paltry volume of 114,000 shares per day on average and has a Zacks ETF Rank #2 with a High risk outlook.
iShares U.S. Consumer Services ETF (IYC - Free Report)
iShares U.S. Consumer Discretionary ETF offers exposure to U.S. companies that distribute food, drugs, general retail items and media by tracking the Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index. It holds 173 stocks in its basket, with key holdings in retailing, consumer services, media & entertainment, and autos & components.
iShares U.S. Consumer Discretionary ETF has amassed $725.3 million in its asset base, and trades in a moderate volume of 108,000 shares a day on average. It charges 39 bps in annual fees from investors.