Why invest in Consumer Discretionary?
Consumer Discretionary sector consists of all companies that sell non-essential goods and services like consumer durable , automobiles , luxury goods , hotels and restaurants etc. The sector experiences growth when there is higher purchasing power in the hands of the consumer . Consumer Discretionary Sector performs well when the economy is just emerging from a recession and is experiencing growth. On the other hand the sector is hardest hit when consumers pullback on spending on non-necessities in times of recession. Thus the companies involved in this sector tend to have periods of rapid growth and sharp declines.
As per GICS definition the Consumer Discretionary Sector is further broken into:
- Manufacturing segment including automotive, household durable goods, leisure equipment and textiles & apparel. and
- Services segment including hotels, restaurants and other leisure facilities, media production and services, and consumer retailing and services.
Key indicators to consider before investing
- Consumer Spending
- GDP Growth
- Consumer spending habits
- Population Growth
Top 5 ETF’s by Market Capitalization
|Name of the Fund||Ticker Symbol /Total AUM*||Year of Inception||Expense Ratio|
|Consumer Discretionary Select Sector SPDR||XLY||12/16/1998||0.14%|
|Vanguard Consumer Discretionary||VCR||01/26/2000||0.10%|
|First Trust Consumer Discretionary Alpha||FXD||05/08/2007||0.61%|
|iShares Dow Jones US Consumer||IYC||06/12/2000||0.44%|
|SPDR S&P Retail||XRT||06/19/2006||0.35%|