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ETFs Set to Gain Amid Robust Holiday Consumer Sentiment
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Americans are feeling more confident about the economy than they did over the past few months, heading into the crucial holiday season. This is especially true as consumer sentiment rebounded sharply in early December as worries about inflation receded. Rising consumer sentiment bodes well for household spending in the coming months. It 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 like 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) . These funds have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy), suggesting their outperformance in the months ahead (read: 5 Must-Buy ETFs for Holiday Boost).
The preliminary University of Michigan Index of Consumer Sentiment jumped 13.2% to 69.4 in early December from 61.3 in November and reflected 16.1% growth from the year-ago month. This marked the highest level since August and broke a streak of four consecutive months of decline.
The improvement in consumer sentiment was broad-based across age, income, education, geography and political identification. All five index components rose this month, led by more than 24% growth for both the short and long-run outlook for business conditions.
The year-ahead inflation expectations fell sharply to 3.1%, the lowest since March 2021, and a considerable decrease from the previous month's 4.5%. This decline of 1.4 percentage points is the largest since October 2001. Similarly, long-run inflation expectations also dropped to 2.8% from 3.2% in November, matching the second-lowest reading since July 2021.
The recent decline in gas prices and durable goods prices has raised consumers’ confidence. The data supports the view that the Fed is likely done with its rate hiking cycle.
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 53 securities in its basket, with key holdings in broadline retail, hotels, restaurants and leisure, automobiles, and specialty retail 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 $18.2 billion and an average daily volume of around 6 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #1 with a Medium risk outlook (read: Invest Like Billionaires With These Stocks & ETFs).
Vanguard Consumer Discretionary ETF follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 307 stocks in its basket. In terms of industrial exposure, broadline 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 96,000 shares a day. The fund has managed $5 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #1 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 300 stocks in its basket.
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.3 billion in its asset base while trading in a good volume of around 78,000 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 86 securities in its basket, with specialty retail taking the largest share at 34%, while household durables, and hotels, restaurants and leisure account for double-digit exposure each (read: 5 ETFs to Play in December).
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $31.9 million in AUM and charges 30 bps in annual fees. It trades in an average daily volume of about 1,000 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 78 stocks in its basket. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, specialty retail, automotive retail and broadline retail.
SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $401.6 million and an average trading volume of 8 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
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ETFs Set to Gain Amid Robust Holiday Consumer Sentiment
Americans are feeling more confident about the economy than they did over the past few months, heading into the crucial holiday season. This is especially true as consumer sentiment rebounded sharply in early December as worries about inflation receded. Rising consumer sentiment bodes well for household spending in the coming months. It 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 like 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) . These funds have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy), suggesting their outperformance in the months ahead (read: 5 Must-Buy ETFs for Holiday Boost).
The preliminary University of Michigan Index of Consumer Sentiment jumped 13.2% to 69.4 in early December from 61.3 in November and reflected 16.1% growth from the year-ago month. This marked the highest level since August and broke a streak of four consecutive months of decline.
The improvement in consumer sentiment was broad-based across age, income, education, geography and political identification. All five index components rose this month, led by more than 24% growth for both the short and long-run outlook for business conditions.
The year-ahead inflation expectations fell sharply to 3.1%, the lowest since March 2021, and a considerable decrease from the previous month's 4.5%. This decline of 1.4 percentage points is the largest since October 2001. Similarly, long-run inflation expectations also dropped to 2.8% from 3.2% in November, matching the second-lowest reading since July 2021.
The recent decline in gas prices and durable goods prices has raised consumers’ confidence. The data supports the view that the Fed is likely done with its rate hiking cycle.
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 53 securities in its basket, with key holdings in broadline retail, hotels, restaurants and leisure, automobiles, and specialty retail 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 $18.2 billion and an average daily volume of around 6 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #1 with a Medium risk outlook (read: Invest Like Billionaires With These Stocks & ETFs).
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 307 stocks in its basket. In terms of industrial exposure, broadline 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 96,000 shares a day. The fund has managed $5 billion in its asset base so far. Vanguard Consumer Discretionary ETF has a Zacks ETF Rank #1 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 300 stocks in its basket.
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.3 billion in its asset base while trading in a good volume of around 78,000 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 86 securities in its basket, with specialty retail taking the largest share at 34%, while household durables, and hotels, restaurants and leisure account for double-digit exposure each (read: 5 ETFs to Play in December).
Invesco S&P SmallCap Consumer Discretionary ETF has attracted $31.9 million in AUM and charges 30 bps in annual fees. It trades in an average daily volume of about 1,000 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 78 stocks in its basket. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, specialty retail, automotive retail and broadline retail.
SPDR S&P Retail ETF is the largest and most popular in the retail space, with AUM of $401.6 million and an average trading volume of 8 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.