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Should You Invest in the Consumer Discretionary Select Sector SPDR ETF (XLY)?
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Designed to provide broad exposure to the Consumer Discretionary - Broad segment of the equity market, the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) is a passively managed exchange traded fund launched on 12/16/1998.
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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 $17.11 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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.86%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 100% of the portfolio.
Looking at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 22.87% of total assets, followed by Tesla Inc (TSLA - Free Report) and Mcdonald S Corp (MCD - Free Report) .
The top 10 holdings account for about 71.76% of total assets under management.
Performance and Risk
The ETF has added about 30.55% so far this year and is up about 18.35% in the last one year (as of 11/15/2023). In that past 52-week period, it has traded between $126.26 and $176.97.
The ETF has a beta of 1.19 and standard deviation of 25.15% for the trailing three-year period, making it a medium risk choice in the space. With about 54 holdings, it effectively diversifies company-specific risk.
Alternatives
Consumer Discretionary Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLY is a great option for investors seeking exposure to the Consumer Discretionary ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $1.27 billion in assets, Vanguard Consumer Discretionary ETF has $4.67 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)?
Designed to provide broad exposure to the Consumer Discretionary - Broad segment of the equity market, the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) is a passively managed exchange traded fund launched on 12/16/1998.
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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 $17.11 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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.86%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 100% of the portfolio.
Looking at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 22.87% of total assets, followed by Tesla Inc (TSLA - Free Report) and Mcdonald S Corp (MCD - Free Report) .
The top 10 holdings account for about 71.76% of total assets under management.
Performance and Risk
The ETF has added about 30.55% so far this year and is up about 18.35% in the last one year (as of 11/15/2023). In that past 52-week period, it has traded between $126.26 and $176.97.
The ETF has a beta of 1.19 and standard deviation of 25.15% for the trailing three-year period, making it a medium risk choice in the space. With about 54 holdings, it effectively diversifies company-specific risk.
Alternatives
Consumer Discretionary Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLY is a great option for investors seeking exposure to the Consumer Discretionary ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $1.27 billion in assets, Vanguard Consumer Discretionary ETF has $4.67 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.