”As [the saving rate]comes down that would lead to elevated consumer spending,” Furman said.
As consumers begin spending more, discretionary sector stocks would begin to gain momentum. For instance, XLY tracks consumer discretionary stocks from the S&P 500. The smart-beta FXD follows an enhanced index that selects stocks based on value and growth factors, but the ETF may been seen as more value-oriented than other discretionary ETF options. VCR is much more diversified, including large-, medium- and small-cap stocks in the discretionary space.
XLY and VCR follow more market-capitalization-weighted indices, so large companies like Walt Disney (NYSE: DIS) and Amazon (NasdaqGS: AMZN) make up large positions in the ETFs’ portfolios. On the other hand, FXD equally weights components so it has a greater tilt toward mid- and small-cap stocks.
Consumer Discretionary Select Sector SPDR
For more information on the consumer sector, visit our consumer discretionary category.
Max Chen contributed to this article.