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Consumer Confidence Slips From 18-Year High: ETFs in Focus

For the first time in five months, U.S. consumer confidence has fallen following signs of easing economic growth. The Conference Board's Consumer Confidence Index dropped to 135.7, from an 18-year high of 137.9 in October. Despite the fall, the numbers still remain near historically strong levels.

This survey measures the sentiments with regard to present economic conditions and what is to follow in the next six months. The survey is keenly followed as consumer spending accounts for about 70% of the U.S. economic activity. Consumers seem to be having a favorable outlook toward the economy as the months ranging from July -September saw spending rise at an annual pace of 4% —its fastest pace since late 2014. Consumer spending rose in October as well (read: 5 ETFs That Deserve Special Thanks in 2018).

However, the recent stock market fall has weighed on consumer sentiments. Additionally, the ever-escalating trade war and political gridlock after mid-term results affected optimism related to capital investments done by businesses. 

Lynn Franco, the Conference Board's director of economic indicators said that overall consumers are still very confident about the pace of growth in early 2019. However, Franco cautioned that if the outlook for the economy dims further in the coming months, growth could be affected. 

Share of respondents who feel that business conditions are going to improve in the next six months were at a five-month low of 22.5%. There was also growing pessimism surrounding growth in income as respondents expecting incomes to rise fell to a four-month low (read: Follow Goldman With These Commodity ETFs).

About 46.6% of the respondents said that jobs are “plentiful”—highest share since January 2001. However, the labor differential, which measures the gap between respondents saying jobs are plentiful and those who say they’re hard to get, hiked to a 17-year high, indicating the presence of opposing views for the labor markets.

Rising interest rates have affected the housing market, which seems to be suffering from a decline in demand. Per a report issued on Nov 27, S&P CoreLogic Case-Shiller 20-city index of property values rose at their lowest levels in two years for the month of September.

In a recent interview in New York, Federal Reserve Vice Chairman Richard Clarida sounded optimistic about the economic state of affairs and indicated that the Fed will stick to its plan of gradual rate hikes as long as economic data justify more possible hikes. This led to a rally in the greenback on Nov 27.

The upcoming G-20 summit is also gaining keen interest among investors with regard to the meet between President Trump and Xi Jinping. The outcome of this meet will have a major say on the global market scene as well how consumers expect the economy to perform.

Consumer confidence level has a direct say on the consumer discretionary sector as it attracts a large chunk of spending.  Below we highlight five popular consumer discretionary ETFs in detail (see: all the  Consumer Discretionary ETFs)

Consumer Discretionary Select Sector SPDR Fund XLY

The fund tracks the Consumer Discretionary Select Sector Index and comprises 65 holdings. It has AUM of $13 billion and expense ratio of 0.13%. The fund has returned 0.6% over the past four weeks.

Vanguard Consumer Discretionary ETF VCR

The fund tracks the MSCI US Investable Market Consumer Discretionary 25/50 Index and has 325 holdings. It manages an asset base of $2.7 billion and has an expense ratio of 0.10%. The fund has returned 0.6% over the past four weeks.

Fidelity MSCI Consumer Discretionary Index ETF (FDIS

The fund tracks the MSCI USA IMI Consumer Discretionary Index and comprises 339 holdings. Its AUM is $637.1 million and expense ratio is 0.08%. The fund has returned 0.6% over the past four weeks.


The fund tracks the S&P Retail Select Industry Index and comprises 95 holdings. It manages assets worth $557.9 million and has expense ratio of 0.35%. The fund has lost 4.1% over the past four weeks (read: Oil Price on Longest-Ever Losing Streak: 5 ETF Zones to Benefit).

First Trust Consumer Discretionary AlphaDEX Fund FXD

The fund tracks the StrataQuant Consumer Discretionary Index and comprises 110 holdings. Its AUM is $359 million and expense ratio is 0.63%. The fund has returned 0.3% over the past four weeks.

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FID-CON DIS (FDIS): ETF Research Reports
FT-CONSUMR DIS (FXD): ETF Research Reports
VIPERS-CONS DIS (VCR): ETF Research Reports
SPDR-CONS DISCR (XLY): ETF Research Reports
SPDR-SP RET ETF (XRT): ETF Research Reports
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