The discretionary sector has lived up to its billing as a valid rising rates play. Over the past three months has 10-year yields are up 6.2%, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) has gained 7.5%.
“The recent spike in Treasury yields has caused a reevaluation of many equity strategies and an underperformance for the sectors with the highest dividend yields—typically Utilities and Telecommunication sectors. Investors should potentially look to the higher-growing and lower-yielding sectors in order to lower their portfolios’ sensitivity to potential further increases in Treasury yields,” said Schwartz.
Consumer Discretionary Select Sector SPDR
ETF Trends editorial team contributed to this post.