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Tom Lydon, ETF Trends (180 clicks)
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ETF Spotlight on Consumer Discretionary Select Sector SPDR Fund (NYSEArca: XLY), part of an ongoing series.

Assets: $2.6 billion.

Objective: The Consumer Discretionary Select Sector Index includes companies from retail (specialty, multi-line, internet and catalog); media; hotels, restaurants & leisure; household durables; textiles, apparel & luxury goods; automobiles, auto components and distributors; leisure equipment & products; and diversified consumer services.

What You Should Know:

  • Gross expense ratio: 0.2%.
  • XLY has gained about 4% so far this year.
  • Top holdings include McDonald’s (NYSE: MCD), Disney (NYSE: DIS), Amazon (NasdaqGS: AMZN) and Home Depot (NYSE: HD).
  • First Trust Consumer Discretionary AlphaDex (NYSEArca: FXD) is the next largest ETF tracking the sector by assets.
  • Consumer discretionary stocks are seen as more cyclical, or sensitive to the economy. Consumer staples stocks are more defensive.
  • Consumer discretionary ETFs are among the sectors that have seen a recent pickup in implied volatility, an analyst says.

The Latest News:

  • Consumer discretionary stocks held up very well in Thursday’s seesaw action as sector ETFs posted decent gains.
  • Standard & Poor’s analysts say within the consumer discretionary sector, discounters are among the best positioned. “Like the dollar stores, Target (NYSE: TGT) is driving store traffic with an expanded food assortment in new and remodeled stories,” they wrote in a recent note. XLY has 2.6% in Target.
  • “To offset margin pressure from rising product and freight costs, as well as from sales being weighted toward lower-margin consumables, Target and the dollar stores are selectively raising prices, expanding private label offerings, and increasing direct sourcing,” S&P added. “On the whole, we think discounters are also doing a good job of managing inventory levels of more discretionary-purchase categories (e.g., apparel, home decor and seasonal merchandise), which is limiting their markdown risk.”

Consumer Discretionary Select Sector SPDR Fund


Tisha Guerrero contributed to this article.

Source: ETF Spotlight: Consumer Discretionary SPDR