ETFs to Consider as Consumer Sentiment Improves in July

Economic Outlook - U.S. consumer sentiment reached a five-month high in July, with the Consumer Sentiment Index increasing to 61.8 from 60.7 in June, indicating growing optimism about the economy [3] - Rising consumer sentiment is expected to positively influence household spending, particularly benefiting the consumer discretionary sector [1][3] Inflation Expectations - A significant factor contributing to improved consumer sentiment is the decline in inflation expectations, with consumers now anticipating a 4.4% price increase over the next year, down from 5% in June, marking the lowest short-term inflation outlook since February [4] - Long-term inflation expectations also decreased to 3.6%, the lowest in five months [4] Consumer Caution - Despite the positive sentiment, consumers remain cautious regarding business conditions, labor markets, and personal income prospects compared to the previous year [5] - The recent increase in sentiment suggests that consumers believe the risk of worst-case scenarios has diminished [5] Investment Opportunities in ETFs - Investors can capitalize on the positive consumer sentiment trend through consumer discretionary ETFs, including: - Consumer Discretionary Select Sector SPDR Fund (XLY): Holds 51 securities with significant allocations in hotels, restaurants, leisure, and retail, boasting an AUM of $22.3 billion and an expense ratio of 0.08% [2][5] - Vanguard Consumer Discretionary ETF (VCR): Comprises 296 stocks, primarily in broadline retail and automobiles, with an asset base of $6 billion and low fees of 9 bps [2][6] - Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ): Focuses on 37 stocks showing momentum, with an asset base of $30.6 million and annual fees of 60 bps [2][7] - VanEck Vectors Retail ETF (RTH): Tracks the performance of 26 large retail firms, with an asset base of $244.1 million and annual fees of 35 bps [2][8]