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Should You Invest in the iShares Global Consumer Discretionary ETF (RXI)?

Sweta Killa
RLI Corp. (RLI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Looking for broad exposure to the Consumer Discretionary - Broad segment of the U.S. equity market? You should consider the iShares Global Consumer Discretionary ETF (RXI), a passively managed exchange traded fund launched on 09/12/2006.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $253.88 M, making it one of the average sized ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the U.S. equity market. RXI seeks to match the performance of the S&P Global 1200 Consumer Discretionary Sector Index before fees and expenses.

The S&P Global Consumer Discretionary Sector Index measures the performance of companies that are part of the consumer discretionary sector of the economy and that are important to global markets. It is a subset of the S&P Global 1200 Index. Components include consumer product manufacturing, service, media and retail companies.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.48%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.19%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Amazon Com Inc (AMZN) accounts for about 13.36% of total assets, followed by Home Depot Inc (HD) and Toyota Motor Corp (7203).

The top 10 holdings account for about 39.76% of total assets under management.

Performance and Risk

The ETF return is roughly 5.49% and was up about 16.60% so far this year and in the past one year (as of 05/28/2018), respectively. RXI has traded between $98.03 and $119.68 during this last 52-week period.

The ETF has a beta of 1.10 and standard deviation of 13.89% for the trailing three-year period, making it a low risk choice in the space. With about 188 holdings, it effectively diversifies company-specific risk.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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