Specialized ETFs that focus on discretionary sectors are poised to benefit from higher consumer spending if U.S. employment data continues to improve, analysts say.
“With the economy appearing to be in recovery as stronger than expected jobs numbers keep coming in each month, some investors might be inclined to bet on improved consumer spending,” writes Joel Anderson at Equities.com.
“If the economy is in recovery, one sector that should stand to benefit the most is consumer discretionary. More jobs and increased income should mean increased disposable income for a great many Americans, and that could mean that the consumer discretionary sector on the whole, could be on the rise,” he adds.
Discretionary income is whatever consumers have left over after shelling out for life’s necessities such as food and shelter, and includes cash spent on luxury items.
Anderson points to several ETFs that should profit from rising consumer spending: Global X Auto (NYSEArca: VROM), Market Vectors Gaming (NYSEArca: BJK), PowerShares Dynamic Leisure & Entertainment (NYSEArca: PEJ), SPDR S&P Retail (NYSEArca: XRT), Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) and other consumer discretionary funds.