Launched on 12/16/1998, the Consumer Discretionary Select Sector SPDR ETF (XLY) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Discretionary – Broad segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $17.82 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 0.65%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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 100% of the portfolio.
Looking at individual holdings, Amazon.com Inc. (AMZN) accounts for about 23.15% of total assets, followed by Tesla Inc (TSLA) and Mcdonald’s Corporation (MCD).
The top 10 holdings account for about 68.95% of total assets under management.
Performance and Risk
Year-to-date, the Consumer Discretionary Select Sector SPDR ETF has lost about -19.91% so far, and is down about -5.12% over the last 12 months (as of 04/28/2022). XLY has traded between $163.19 and $211.42 in this past 52-week period.
The ETF has a beta of 1.15 and standard deviation of 25.39% for the trailing three-year period, making it a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
Alternatives
Consumer Discretionary Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLY is an outstanding 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.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS) tracks MSCI USA IMI Consumer Discretionary Index and the Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index. Fidelity MSCI Consumer Discretionary Index ETF has $1.32 billion in assets, Vanguard Consumer Discretionary ETF has $5.75 billion. FDIS has an expense ratio of 0.08% 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
.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report