Core Insights - Recent inflation data and comments from Fed officials have increased expectations for interest rate cuts, with markets now pricing a 25.5% likelihood of rates being lowered to 3.25-3.5% by January 2026, up from 15.3% a month earlier [1] Inflation Data - Softer U.S. inflation data has strengthened expectations for two or more Fed rate cuts in the coming year, with November's underlying inflation growing at the slowest pace since early 2021 and headline CPI rising 2.7% year over year, below forecasts [2] Fed Leadership and Rate Cuts - Comments from President Trump suggest that the next Fed chair will favor lower interest rates, contributing to market bets on additional rate cuts next year [4] - Fed Governor Christopher Waller indicated that the Fed has room to ease interest rates, citing signs of weakening in the labor market, and suggested that any additional cuts might occur at a moderate pace [5] Financial Sector Impact - Anticipated Fed interest rate cuts in 2026 are expected to provide a significant boost to the financial sector, as lower rates could reduce capital costs for banks and enhance loan activity [7] - The Dow Jones U.S. Financial Services Index has gained 19.70% over the past year and 2.41% month to date, indicating strong performance in the sector [8] Consumer Discretionary Sector - Lower interest rates are expected to improve consumer access to credit and boost spending power, positively impacting profit margins in the consumer discretionary sector, which has seen a 7.17% increase year to date and 2.47% month to date [10] Small-Cap Stocks - Small-cap stocks, which rely heavily on external borrowings, are likely to benefit significantly from lower interest rates, allowing for increased capital availability and refinancing of existing debt at cheaper rates [12]

Core Insights - The Vanguard Consumer Discretionary ETF (VCR) is a passively managed fund launched on January 26, 2004, aimed at providing broad exposure to the Consumer Discretionary - Broad segment of the equity market [1] - The ETF has gained popularity among institutional and retail investors due to its low cost, transparency, flexibility, and tax efficiency, making it suitable for long-term investment [1] Fund Overview - VCR has amassed over $6.51 billion in assets, positioning it as one of the largest ETFs in the Consumer Discretionary - Broad segment [3] - The fund seeks to match the performance of the MSCI US Investable Market Consumer Discretionary 25/50 Index [3][4] Cost Structure - The annual operating expenses for VCR are 0.09%, making it one of the least expensive options in the ETF space [5] - The ETF has a 12-month trailing dividend yield of 0.75% [5] Sector Exposure and Holdings - VCR has a heavy allocation in the Consumer Discretionary sector, with approximately 99.9% of its portfolio dedicated to this area [6] - Amazon.com Inc (AMZN) constitutes about 25.07% of total assets, followed by Tesla Inc (TSLA) and Home Depot Inc (HD) [7] Performance Metrics - The ETF has gained approximately 4.91% year-to-date and is up roughly 25.54% over the past year as of September 10, 2025 [8] - In the last 52 weeks, VCR has traded between $290.42 and $401.37 [8] - The ETF has a beta of 1.26 and a standard deviation of 22.66% over the trailing three-year period, indicating medium risk [8] Alternatives - VCR carries a Zacks ETF Rank of 3 (Hold), suggesting it is a reasonable option for investors seeking exposure to the Consumer Discretionary sector [9] - Other alternatives include iShares U.S. Home Construction ETF (ITB) and Consumer Discretionary Select Sector SPDR ETF (XLY), with respective assets of $3.28 billion and $24.18 billion [10]

Core Insights - The Consumer Discretionary Select Sector SPDR ETF (XLY) is a passively managed ETF launched on December 16, 1998, providing broad exposure to the Consumer Discretionary sector of the equity market [1] - XLY has amassed over $22.03 billion in assets, making it the largest ETF in its category, aiming to match the performance of the Consumer Discretionary Select Sector Index [3] - The ETF has an annual operating expense ratio of 0.08%, making it the least expensive option in the sector, with a 12-month trailing dividend yield of 0.83% [4] Sector Exposure and Holdings - XLY has a 100% allocation in the Consumer Discretionary sector, providing diversified exposure and minimizing single stock risk [5] - Amazon.com Inc (AMZN) constitutes approximately 23.47% of total assets, followed by Tesla Inc (TSLA) and Home Depot Inc (HD), with the top 10 holdings accounting for about 68.63% of total assets [6] Performance Metrics - The ETF has experienced a loss of about 1.98% year-to-date but has gained approximately 28.95% over the past year, trading between $170.05 and $239.43 in the last 52 weeks [7] - With a beta of 1.21 and a standard deviation of 22.73% over the trailing three-year period, XLY is categorized as a medium-risk investment [7] Alternatives - XLY carries a Zacks ETF Rank of 3 (Hold), indicating a sufficient option for investors seeking exposure to the Consumer Discretionary sector [8] - Other ETF options in the space include iShares U.S. Home Construction ETF (ITB) with $2.78 billion in assets and Vanguard Consumer Discretionary ETF (VCR) with $6.09 billion in assets, each with different expense ratios [10]

Core Viewpoint - The Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) offers investors broad exposure to the consumer discretionary sector, utilizing a smart beta strategy that aims to outperform traditional market cap weighted indexes [1][3]. Fund Overview - RSPD was launched on November 1, 2006, and is managed by Invesco, with total assets exceeding $204.44 million, categorizing it as an average-sized ETF in the consumer discretionary space [1][5]. - The fund seeks to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index, which equally weights stocks in the consumer discretionary sector [5]. Cost Structure - The annual operating expenses for RSPD are 0.40%, which is competitive within its peer group [6]. - The fund has a 12-month trailing dividend yield of 0.71% [6]. Sector Exposure and Holdings - RSPD is fully allocated to the consumer discretionary sector, representing 100% of its portfolio [7]. - The top holdings include Carnival Corp (2.33% of total assets), Royal Caribbean Cruises Ltd, and Nike Inc, with the top 10 holdings accounting for approximately 21.73% of total assets [8]. Performance Metrics - Year-to-date, RSPD has increased by about 4.38% and has risen approximately 20.27% over the last 12 months as of August 5, 2025 [10]. - The fund has traded between $44.09 and $56.67 in the past 52 weeks, with a beta of 1.20 and a standard deviation of 20.72% over the trailing three-year period [10]. Alternatives - For investors seeking to outperform the consumer discretionary segment, alternatives such as the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY) are available, with VCR having $6.07 billion in assets and XLY $21.93 billion [12]. - VCR has a lower expense ratio of 0.09%, while XLY has an expense ratio of 0.08% [12].

Core Viewpoint - The First Trust Consumer Discretionary AlphaDEX ETF (FXD) is a passively managed ETF that provides broad exposure to the Consumer Discretionary - Broad segment of the equity market, appealing to both retail and institutional investors due to its low costs and tax efficiency [1][3]. Group 1: ETF Overview - FXD was launched on May 8, 2007, and has accumulated over $315.05 million in assets, making it one of the larger ETFs in its category [3]. - The ETF aims to match the performance of the StrataQuant Consumer Discretionary Index, utilizing the AlphaDEX stock selection methodology to choose stocks from the Russell 1000 Index [3]. Group 2: Costs and Performance - The annual operating expenses for FXD are 0.61%, which is competitive within its peer group, and it has a 12-month trailing dividend yield of 1.13% [4]. - As of August 4, 2025, FXD has experienced a year-to-date loss of approximately 0.88% but has gained about 8.32% over the past year [7]. Group 3: Sector Exposure and Holdings - The ETF has a significant allocation of about 75.7% in the Consumer Discretionary sector, with Telecom and Industrials also represented [5]. - Dillard's, Inc. (class A) constitutes about 1.53% of total assets, with the top 10 holdings making up approximately 15.03% of total assets under management [6]. Group 4: Alternatives and Market Position - FXD holds a Zacks ETF Rank of 4 (Sell), indicating it may not be the best choice for investors seeking exposure to the Consumer Discretionary segment [8]. - Alternative ETFs such as the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have significantly larger asset bases of $6.00 billion and $21.68 billion, respectively, and lower expense ratios of 0.09% and 0.08% [10].

Core Insights - The iShares U.S. Home Construction ETF (ITB) is designed to provide broad exposure to the Consumer Discretionary - Broad segment of the equity market and is passively managed, making it a popular choice among investors due to its low costs and transparency [1][3] Fund Overview - ITB has amassed assets over $2.74 billion, making it one of the largest ETFs in the Consumer Discretionary - Broad segment [3] - The ETF seeks to match the performance of the Dow Jones U.S. Select Home Construction Index, which includes U.S. equities in the home construction sector [3] Cost Structure - The annual operating expenses for ITB are 0.39%, which is considered low compared to other funds in the space [4] - The ETF has a 12-month trailing dividend yield of 0.56% [4] Sector Exposure and Holdings - Approximately 78.3% of ITB's portfolio is allocated to the Consumer Discretionary sector, with Industrials and Materials following [5] - D R Horton Inc (DHI) constitutes about 14.3% of total assets, with the top 10 holdings accounting for approximately 66.55% of total assets under management [6] Performance Metrics - Year-to-date, ITB has lost about 2% and is down approximately 13.91% over the last 12 months as of August 4, 2025 [7] - The ETF has traded between $85.52 and $129.34 in the past 52 weeks, with a beta of 1.26 and a standard deviation of 28.32% for the trailing three-year period, indicating high risk [7] Alternatives - ITB has a Zacks ETF Rank of 4 (Sell), suggesting it may not be the best choice for investors seeking exposure to the Consumer Discretionary ETFs segment [8] - Alternatives include the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY), which have larger asset bases and lower expense ratios [10]

Core Viewpoint - The Fidelity MSCI Consumer Discretionary Index ETF (FDIS) is a passively managed ETF that provides broad exposure to the Consumer Discretionary sector, appealing to both retail and institutional investors due to its low costs and tax efficiency [1][3]. Group 1: ETF Overview - FDIS was launched on October 21, 2013, and has accumulated over $1.85 billion in assets, making it one of the largest ETFs in its category [3]. - The ETF aims to match the performance of the MSCI USA IMI Consumer Discretionary Index, which reflects the U.S. consumer discretionary sector [3]. Group 2: Cost Structure - FDIS has an annual operating expense ratio of 0.08%, making it the least expensive option in its category [4]. - The ETF offers a 12-month trailing dividend yield of 0.76% [4]. Group 3: Sector Exposure and Holdings - The ETF is fully allocated to the Consumer Discretionary sector, with Amazon.com Inc (AMZN) representing approximately 23.76% of total assets [5][6]. - The top 10 holdings constitute about 58.79% of total assets under management [6]. Group 4: Performance Metrics - As of July 28, 2025, FDIS has increased by approximately 21.88% over the past year and has a year-to-date gain of about 0.27% [7]. - The ETF has traded between $75.33 and $104.24 in the last 52 weeks, with a beta of 1.29 and a standard deviation of 23.15% over the trailing three-year period, indicating medium risk [7]. Group 5: Alternatives - FDIS has a Zacks ETF Rank of 5 (Strong Sell), suggesting it may not be the best option for investors seeking exposure to the Consumer Discretionary sector [8]. - Alternatives include the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY), which have larger asset bases and competitive expense ratios [10].

Core Insights - The Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) is a passively managed ETF launched on November 1, 2006, providing broad exposure to the Consumer Discretionary sector [1] - The ETF has assets over $207.32 million and aims to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index [3] - The ETF has an annual operating expense of 0.40% and a 12-month trailing dividend yield of 0.70% [4] Sector Overview - The Consumer Discretionary - Broad sector is ranked 11th among 16 Zacks sectors, placing it in the bottom 31% [2] - The ETF offers approximately 100% allocation in the Consumer Discretionary sector, providing diversified exposure [5] Holdings and Performance - Carnival Corp (CCL) accounts for about 2.33% of total assets, with the top 10 holdings representing approximately 21.73% of total assets [6] - The ETF has returned roughly 5.65% year-to-date and 15.50% over the past year, with a trading range between $44.09 and $56.27 in the last 52 weeks [7] Alternatives - The Invesco S&P 500 Equal Weight Consumer Discretionary ETF has a Zacks ETF Rank of 4 (Sell), indicating it may not be the best choice for investors seeking exposure to this sector [8] - Alternatives include the Vanguard Consumer Discretionary ETF (VCR) with $6.29 billion in assets and an expense ratio of 0.09%, and the Consumer Discretionary Select Sector SPDR ETF (XLY) with $22.97 billion in assets and an expense ratio of 0.08% [9]

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]

Core Insights - The First Trust Consumer Discretionary AlphaDEX ETF (FXD) is a smart beta ETF launched on May 8, 2007, providing broad exposure to the Consumer Discretionary sector [1] - FXD is managed by First Trust Advisors and has accumulated over $334.25 million in assets, making it one of the larger ETFs in its category [5] - The fund aims to match the performance of the StrataQuant Consumer Discretionary Index using the AlphaDEX stock selection methodology [5] Fund Characteristics - FXD has an annual operating expense ratio of 0.61%, which is competitive within its peer group, and a 12-month trailing dividend yield of 1.10% [6] - The ETF has a significant allocation of approximately 75.6% in the Consumer Discretionary sector, with Telecom and Industrials also represented [7] - The top three holdings include Carvana Co. (CVNA) at 2.07%, Five Below, Inc. (FIVE), and Spotify Technology S.a. (SPOT), with the top 10 holdings comprising about 15.9% of total assets [8] Performance Metrics - As of July 14, 2025, FXD has returned approximately 1.78% year-to-date and 9.79% over the past year, with a trading range between $50.42 and $68.52 in the last 52 weeks [10] - The fund has a beta of 1.20 and a standard deviation of 22.04% over the trailing three-year period, indicating a medium risk profile [10] Alternatives - Investors seeking to outperform the Consumer Discretionary ETFs segment may consider alternatives such as the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY), which have significantly larger asset bases of $6.17 billion and $22.66 billion respectively [12] - VCR has a lower expense ratio of 0.09% compared to FXD, while XLY has an expense ratio of 0.08% [12]