Back to top

Image: Bigstock

Consumer Discretionary ETFs That Hit New All-Time Highs

Read MoreHide Full Article

With the stock market rallying and the economy showing signs of resilience, the consumer discretionary sector is not far behind with many ETFs hitting record highs. Most of the gains were driven by improvement in trade relation between the world’s two biggest economies, the easing of policies by the Fed and solid corporate earnings (read: 4 Sector ETFs That Hit All-Time Highs).  

Additionally, the U.S. economy continued to grow moderately this year. The labor market was off to a strong start in 2020, creating 225,000 new jobs in January. The manufacturing sector, which had languished in contraction territory for five months, rebounded strongly in January while services sector activity also picked up, with industries reporting increase in new orders. Retail sales strengthened for a fourth consecutive month and homebuilder sentiment is hovering near the highest level since 1999.

U.S. consumer sentiment, as recorded by the University of Michigan’s consumer sentiment index, came in higher than expected for February despite the recent outbreak of coronavirus. A flurry of upbeat data has spread optimism and bullishness, at least for the near term, in this important market segment.

Given this, we have highlighted a few consumer discretionary ETFs that hit new all-time highs in recent trading session. Any of the following funds could be solid picks for investors to ride out the current trends. These products carry a Zacks ETF Rank #2 (Buy) or #3 (Hold) with a Medium risk outlook (read: all the Consumer Discretionary ETFs here).

Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)

This is the largest and the most popular product in the consumer discretionary space with AUM of $15.5 billion and average daily volume of 3.6 million shares. It tracks the Consumer Discretionary Select Sector Index and holds 64 securities with higher concentration on the top firm Amazon (AMZN - Free Report) . Sector wise, Internet & direct marketing retail takes the top spot with 31.4% of assets, followed by specialty retail (25.2%), and hotels, restaurants and leisure (20.1%). The fund charges 13 basis points (bps) in fees per year and has added 5.4% so far this year. It has a Zacks ETF Rank #2.

Vanguard Consumer Discretionary ETF (VCR - Free Report)

This fund follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 297 stocks in its basket with heavy concentration on Amazon. Internet & direct marketing retail is the top sector with more than one-fourth of the portfolio while restaurants and home improvement retail account for the next two spots with double-digit exposure each. VCR charges investors 10 bps in annual fees while volume is moderate at nearly 60,000 shares a day. The product manages an asset base of about $3.3 billion and has gained 7.7% this year. It has a Zacks ETF Rank #2 (read: Amazon Q4 Earnings Put These ETFs in Focus).

Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)

This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding 286 stocks in its basket with heavy concentration on Amazon. Internet & direct marketing retail makes up for the top sector with 31.5% share, followed by specialty retail (21.2%), and hotels restaurants & leisure (18.2%). The product has amassed $823.1 million in its asset base while trading in good volumes of around 76,000 shares a day on average. It charges 8 bps in annual fees from investors and has jumped 8.1% so far this year. The fund has a Zacks ETF Rank #3.

First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report)

This follows an AlphaDEX methodology and ranks stocks in the space by various growth and value factors, eliminating the bottom ranked 25% of the stocks. This approach results in a basket of 119 stocks that are well spread out across components, with each holding less than 2% of assets. Specialty retail is the top sector with 20.4% of the portfolio, closely followed by media & publishing (14.9%), and hotels & entertainment services (13.9%). FXD has AUM of $316.4 million and trades in volume of 74,000 shares per day on average. It charges a higher 64 bps in annual fees and has added 1.3% this year. The product has a Zacks ETF Rank #3.

VanEck Vectors Retail ETF (RTH - Free Report)

This product targets the retail sector and tracks the MVIS US Listed Retail 25 Index, holding 25 securities in its basket. It is also concentrated on the top firm at Amazon with 22.7% allocation. It has amassed $91.5 million in its asset base and charges 35 bps in annual fees. RTH trades in a lower volume of 11,000 shares and has a Zacks ETF Rank #3 (read: Walmart Disappoints: ETFs in Focus).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>