Now that electric car maker Tesla is wearing the S&P 500 member’s club jacket, ETF investors might be wondering how they can get a piece of the action without concentrating too much risk in one stock. One strong way to play the automaker is with the iShares U.S. Consumer Goods ETF (IYK).
IYK seeks to track the investment results of the Dow Jones U.S. Consumer Goods Index composed of U.S. equities in the consumer goods sector. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index.
The underlying index measures the performance of the consumer goods sector of the U.S. equity market. The fund may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents.
In general, IYK gives investors:
- Exposure to U.S. companies that produce a wide range consumer goods, including food, automobiles, and household goods.
- Targeted access to domestic consumer goods stocks.
- Use to express a sector view.
IYK has been a solid performer this year, producing year-to-date gains of 24% according to Yahoo Finance numbers. Within the last 12 months, the fund is up 29%.
A Vote of Confidence from Goldman Sachs
Of course, a lot of IYK’s performance can be attributed to Tesla. The automaker recently got a well-publicized vote of confidence from global investment firm Goldman Sachs.
“Shares in Tesla jumped on Thursday after Goldman Sachs upgraded its stock to “buy” from “neutral” and boosted its price target to $780, currently the highest on Wall Street,” a Business Insider report noted. “Tesla stock rose as much as 5%. The electric vehicle maker’s shares are up 603% year-to-date, boosted by its upcoming inclusion in the S&P 500 on December 21 and fading concerns about its ability to make profits.”
As of December 2, IYK has 14.57% of its fund in Tesla. The electric car maker itself has investors charged up with a year-to-date gain of over 600%.
Per the article, “Goldman’s strategists wrote in a December 2 report that ‘the shift toward battery electric vehicle adoption is accelerating and will occur faster than our prior view.'”
“The energy business should also benefit from the regulatory shift toward carbon reduction and clean energy, and solar market valuations have similarly accelerated,” the strategists stated.
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