Back to top

Image: Bigstock

Should You Invest in the Vanguard Consumer Discretionary ETF (VCR)?

Read MoreHide Full Article

Launched on 01/26/2004, the Vanguard Consumer Discretionary ETF (VCR - Free Report) is a passively managed exchange traded fund designed to provide a 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 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 11, placing it in bottom 31%.

Index Details

The fund is sponsored by Vanguard. It has amassed assets over $5.63 billion, making it one of the largest ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. VCR seeks to match the performance of the MSCI US Investable Market Consumer Discretionary 25/50 Index before fees and expenses.

The MSCI US Investable Market Consumer Discretionary 25/50 Index is designed to transition in and out of securities affected by pending updates to the consumer discretionary sector.

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 0.82%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Discretionary sector--about 99.90% of the portfolio.

Looking at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 22.04% of total assets, followed by Tesla Inc (TSLA - Free Report) and Home Depot Inc/the (HD - Free Report) .

Performance and Risk

Year-to-date, the Vanguard Consumer Discretionary ETF return is roughly 5.21% so far, and is up about 16.41% over the last 12 months (as of 08/28/2024). VCR has traded between $247.89 and $331.81 in this past 52-week period.

The ETF has a beta of 1.30 and standard deviation of 25.10% for the trailing three-year period, making it a medium risk choice in the space. With about 304 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Consumer Discretionary 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, VCR 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.

IShares U.S. Home Construction ETF (ITB - Free Report) tracks Dow Jones U.S. Select Home Construction Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. IShares U.S. Home Construction ETF has $3.15 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $18.74 billion. ITB has an expense ratio of 0.39% and XLY charges 0.09%.

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.

Published in