The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY), which tracks consumer discretionary names in the S&P 500 index, is already this year’s best performer among the nine sector SPDR exchange traded funds by a wide margins, but some market observers see more upside ahead for the already stout consumer discretionary space.
The sector is heading toward a seasonally strong period. Historically, consumer discretionary has been among the better performers during the November through April period since 1990, rising 10.7% on average, compared to the 7.1% gain for the S&P 500 index. Add to that, only two the nine sector SPDRs have taken in more new assets this year than XLY.
XLY, the largest consumer discretionary ETF by assets, includes exposure to retail firms, restaurants, media companies, apparel and luxury goods companies, automobile manufacturers and leisure industries.
Retailers make up a large portion of the underlying holdings. E-commerce and greater mobile commerce usage has also been a big game changer in the industry, especially with more consumers using online sources like Amazon (NasdaqGS: AMZN), which XLY holds.
“Within the sector, the Internet and catalog retail industry has soared, thanks to popular stocks such as Netflix, Amazon and Expedia. But some of the biggest drags on the broader sector also come from the retail space, with names like Fossil, Michael Kors, Ralph Lauren and Gap among the worst performers year to date,” reports CNBC.