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Should You Invest in the Consumer Discretionary Select Sector SPDR ETF (XLY)?
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The Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) was launched on 12/16/1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways 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 9, placing it in bottom 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $19.19 billion, making it the largest ETF attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. XLY seeks to match the performance of the Consumer Discretionary Select Sector Index before fees and expenses.
The Consumer Discretionary Select Sector Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.75%.
Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 23.28% of total assets, followed by Tesla Inc (TSLA - Free Report) and Home Depot Inc (HD - Free Report) .
The top 10 holdings account for about 69.01% of total assets under management.
Performance and Risk
So far this year, XLY has added about 0.16%, and is up about 19.64% in the last one year (as of 05/20/2024). During this past 52-week period, the fund has traded between $148.04 and $185.02.
The ETF has a beta of 1.20 and standard deviation of 24.59% for the trailing three-year period, making it a medium risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
Consumer Discretionary Select Sector SPDR 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, XLY 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.
First Trust Consumer Discretionary AlphaDEX ETF (FXD - Free Report) tracks StrataQuant Consumer Discretionary Index and the Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index. First Trust Consumer Discretionary AlphaDEX ETF has $1.51 billion in assets, Vanguard Consumer Discretionary ETF has $5.51 billion. FXD has an expense ratio of 0.61% and VCR charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the Consumer Discretionary Select Sector SPDR ETF (XLY)?
The Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) was launched on 12/16/1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways 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 9, placing it in bottom 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $19.19 billion, making it the largest ETF attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. XLY seeks to match the performance of the Consumer Discretionary Select Sector Index before fees and expenses.
The Consumer Discretionary Select Sector Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.75%.
Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 23.28% of total assets, followed by Tesla Inc (TSLA - Free Report) and Home Depot Inc (HD - Free Report) .
The top 10 holdings account for about 69.01% of total assets under management.
Performance and Risk
So far this year, XLY has added about 0.16%, and is up about 19.64% in the last one year (as of 05/20/2024). During this past 52-week period, the fund has traded between $148.04 and $185.02.
The ETF has a beta of 1.20 and standard deviation of 24.59% for the trailing three-year period, making it a medium risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
Consumer Discretionary Select Sector SPDR 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, XLY 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.
First Trust Consumer Discretionary AlphaDEX ETF (FXD - Free Report) tracks StrataQuant Consumer Discretionary Index and the Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index. First Trust Consumer Discretionary AlphaDEX ETF has $1.51 billion in assets, Vanguard Consumer Discretionary ETF has $5.51 billion. FXD has an expense ratio of 0.61% and VCR charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.