PEZ differs from standard discretionary ETFs in that it is not home to some of the sector’s most familiar names such as Home Depot, Walt Disney (NYSE: DIS), Ford (NYSE: F) McDonald’s (NYSE: MCD) or cable providers.
Still, compressed margins and high valuations have kept some investors at bay when it comes to discretionary ETFs, but the margin situation is not as bad as some believe it to be.
“In addition, profit margins in the consumer discretionary sector of the S&P 500 Index have been above 6.5% in recent quarters, but have not shown much expansion since 2011.1 Fortunately, The bullish news for this sector lies in the fact that margins are high relative to the 1990s and 2000s, and a strong dollar has made the sourcing of goods cheaper. On balance, I expect the positives of the consumer sector to outweigh the negatives, but investors should also be wary of the risks,” according to PowerShares.
PowerShares DWA Consumer Cyclicals Momentum Portfolio