Consumer Discretionary ETFs: What Happened?

August 17th at 12:00pm by Tom Lydon

It was a heady year-and-a-half for consumer discretionary exchange traded funds (ETFs). And then came a series of left hooks that sent the ETFs down as much as 8% in the last three months. What’s it going to take for a comeback?

These knocks are no surprise. Jonathan Bernstein for ETF Zone reports that consumer sentiment is one of the most important pieces of information for this sector. When sentiment is strong, consumers tend to be willing to spend on discretionary products and services. When sentiment is weak, consumers cut back on discretionary purchases. [How G-20 Reports Affect Consumer Spending.]

  • iShares S&P Global Consumer Discretionary (NYSEArca: RXI): down 5.1% in the last 10 days
  • Vanguard Consumer Discretionary ETF (NYSEArca: VCR): down 5.1% in the last 10 days
  • SPDR S&P Retail (NYSEArca: XRT): down 5.4% in the last 10 days
  • Consumer Discretionary Select Sector SPDR (NYSEArca: XLY): down 4.5% in the last 10 days
  • First Trust Consumer Discretionary AlphaDEX (NYSEArca: FXD): down 5.5% in the last 10 days

Consumers are not only feeling down these days, they’re not spending and they’re saving more. Mark Trumbell for The Christian Science Monitor makes the case that in the long run, this is a good thing because it will foster economic stability. But for now, discretionary ETFs may continue to bear the weight of our newfound frugality. [Consumer Discretionary to Outperform in 2010?]

For more stories about the retail sector, visit our retail category.

There are dozens of ways to play the way Americans spend – just visit our ETF Analyzer and search “consumer.” From there, you can sort by assets, yield, performance and more. Consumer discretionary looks like it might be challenged for the time being; sign up for alerts to be notified via email when a trading signal is hit.

Retail ETFs

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.