Consumer discretionary ETFs are beating consumer staples funds so far this year, but that trend is also reversing in May on the safety trade. This is another example of investors moving away from risk.
“There is no reason to believe another 2008 is around the corner. Even with that said, many investors I speak with are looking for lower-risk ETFs that will move higher if the market rallies, but will not take as big a hit on a pullback. Unfortunately, there is no perfect ETF for that scenario. One of the best sectors for maintaining exposure to the equity market with below average risk is the consumer staples,” wrote Matt McCall at Investopedia.
“If the risk-on trade that was working early in 2012 comes back, it will be good for the high-risk sectors that does not include the consumer staples. If the current movement back to less risky asset continues into the summer, then the consumer staples will be the place to be,” he added.
Sector SPDR Performance in 2012
- Consumer Discretionary: +9.9%
- Consumer Staples: +4.1%
- Energy: -5%
- Financials: +7.3%
- Healthcare: +5.5%
- Industrial: +3.8%
- Materials: +1.1%
- Technology: +11%
- Utilities: -0.5%
Data source: Morningstar as of May 21, 2012.
The chart below shows the relative performance of a utilities ETF versus the S&P 500.
