A leisure and entertainment exchange traded fund is hitting its stride as American consumers forgo grocery shopping and spend more at restaurants.
Year-to-date, the PowerShares Dynamic Leisure and Entertainment Portfolio (NYSEArca: PEJ) has increased 5.5%.
PEJ targets U.S. leisure and entertainment companies, such as resorts, hotels, cruises and restaurants, and also weights components based on price momentum, earnings momentum, quality, management action, and value. The portfolio includes stores like Starbucks (NasdaqGS: SBUX), Denny’s (NasdaqGS: DENN), Sonic (NasdaqGS: SONC), Papa John’s (NasdaqGS: PZZ) and Jack in the Box (NasdaqGS: JACK). [Leisure, Entertainment ETFs: Consumers Spending on ‘Experiences’]
The leisure and entertainment-related fund is gaining momentum as American consumers dine out more. According to the Commerce Department, sales at restaurants and bars overtook spending at grocery stores in March for the first time ever, reports Michelle Jamrisko for Bloomberg.
Morgan Stanley argues that the shift in eating habits may be attributed to the younger generation who is more willing to spend on “food away from home.”
The food services industry is also catching on and is focusing on how to cater to the rising group of young consumers who are set to overtake the baby-boomer generation.
“Millennials view dining out as a social event (i.e. a chance to connect),” the Restaurant Association said. “They tend to favor fast food, deli food and pizza restaurants over coffee shops, high-end dining and casual dining. Their diversity and interest in new things draw them to more ethnic restaurants too.”
In contrast, older Americans are more apt to take grocery trips. According to a Gallup survey, the share of 51-to-69-year-olds who said they are spending more on groceries outpaced those who said they are spending less than by 45 percentage points year-over-year.
PowerShares Dynamic Leisure and Entertainment Portfolio
For more information on the consumer space, visit our consumer discretionary category.
Max Chen 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.