How Amazon is Helping Consumer Discretionary ETFs

For much of the current bull market, the consumer discretionary sector has been a leadership and Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) along with rival exchange traded funds tracking the sector have been solid performers.

XLY, the largest consumer discretionary ETF, is up 9% year-to-date, topping the S&P 500 along the way. Inc. (NASDAQ: AMZN) is a big reason. Shares of the e-commerce juggernaut are up 20.3% this year and that is important to XLY and cap-weighted consumer discretionary ETFs because Amazon is the largest holding by wide margins in these ETFs. In fact, only a handful of S&P 500 members sport larger market caps than Amazon’s $431 billion.

Rivals to XLY include the Vanguard Consumer Discretionary (NYSEArca: VCR) and Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS).

As has been widely documented this year, traditional brick-and-mortar retailers are in perilous positions as shoppers continue gravitating to online venues. The the SPDR S&P Retail ETF (NYSEArca: XRT), the largest retail-related exchange traded fund, has a small weight to Amazon and has been struggling while discretionary and retail ETFs with big Amazon exposure are soaring.