5 ETFs to Ride on Higher Consumer Confidence
Americans are optimistic about 2020 attributable to the initial trade deal, a soaring stock market and the lowest unemployment rate in 50 years. This is especially true as the Conference Board index climbed to a five-month high of 131.6 this month from an upward revised December reading of 128.2.
Other measures of consumer confidence also have remained elevated. The University of Michigan’s index of sentiment remains near one of the best levels in almost two decades while Bloomberg’s consumer comfort gauge touched a 19-year high.
The upbeat data underscores the 11-year longest economic expansion and consumers’ enthusiasm to spend more. Strong job market, steadily rising wages and improving economy led to higher savings and rising take-home pay that increased consumers’ power to spend more. The trend is expected to continue in the weeks ahead. Notably, consumer spending accounts for more than two-thirds of U.S. economic activity (read: Don't Panic About Virus, Buy 5 Beaten-Down Top-Ranked ETFs).
Rising consumer confidence bodes well for household spending in the coming months and is expected to have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending. As such, investors could tap the encouraging trend in the basket form through consumer discretionary ETFs. Below, we have highlighted five of these that target the broad consumer market and are enjoying strong momentum.
ProShares Online Retail ETF ONLN
This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 24 stocks in its basket with higher concentration on Amazon AMZN. The product has amassed $27.5 million in its asset base and trades in paltry volume of around 12,000 shares a day on average. It charges 58 bps in annual fees from investors and has risen 3.9% since the start of the year.
Invesco S&P SmallCap Consumer Discretionary ETF PSCD
The fund follows the S&P SmallCap 600 Capped Consumer Discretionary Index and holds 92 securities in its basket with none accounting for more than 3.64% of the assets. Specialty retail takes the largest share at 26.03% while household durables, textiles, apparel & luxury goods, and auto components round off the next three with double-digit exposure each. The product has attracted $22.4 million in AUM while seeing paltry volume of 1,000 shares per day. The ETF charges 29 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook. It has gained 1.1% in the same timeframe (see: all the Consumer Discretionary ETFs here).
Vanguard Consumer Discretionary ETF VCR
This fund follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 297 stocks in its basket with heavy concentration on Amazon. Internet & direct marketing retail is the top sector with more than one-fourth of the portfolio while restaurants and home improvement retail account for the next two spots with double-digit exposure each. VCR charges investors 10 bps in annual fees while volume is moderate at nearly 62,000 shares a day. The product manages an asset base of about $3.1 billion and has added 0.8% this year. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Fidelity MSCI Consumer Discretionary Index ETF FDIS
This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding 286 stocks in its basket with heavy concentration on Amazon. Internet & direct marketing retail makes up for the top sector with 29.3% share, followed by specialty retail (22%), and hotels restaurants & leisure (18.9%). The product has amassed $758.5 million in its asset base while trading in good volumes of around 78,000 shares a day on average. It charges 8 bps in annual fees from investors and has added 0.8% so far this year. The fund has a Zacks ETF Rank #3 with a Medium risk outlook (read: Will Consumer Discretionary ETFs Suffer the Coronavirus Blow?).
Invesco DWA Consumer Cyclicals Momentum ETF PEZ
This product tracks the DWA Consumer Cyclicals Technical Leaders Index. It holds 40 stocks having positive relative strength (momentum) characteristics, with each holding less than 4.1% of the assets. About 37.5% of the portfolio is dominated by specialty retail while hotel restaurants and leisure, textiles, apparel & luxury goods, and household durables round off the next three positions with double-digit exposure each. The fund has managed $27.4 million in its asset base while trading in lower average daily volume of 19,000 shares. It charges 60 bps in annual fees and is up 0.6% in the same timeframe. The fund has a Zacks ETF Rank #3 with a Medium risk outlook.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Invesco DWA Consumer Cyclicals Momentum ETF (PEZ): ETF Research Reports
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
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