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Why Consumer Discretionary ETFs Rose in November

Mark Jonker

Why the Consumer Discretionary Sector Rose in November

Monthly returns

The US consumer discretionary sector gave positive returns in November due to some strong earnings and macroeconomic data, which provided a positive outlook for the sector going into the most important month for any retailer. The Market Vectors Retail ETF (RTH) surpassed all other prominent US consumer discretionary sector ETFs, rising 2.2% over the month. The Consumer Discretionary Select Sector SPDR ETF (XLY) was not far behind with a rise of 2.1%, whereas the SPDR S&P Retail ETF (XRT) rose 1.9%.

Fund flows suggest positive market sentiment toward the sector

Net fund flows in an ETF are a good indicator of market sentiment toward a sector. If we look at the fund flows in consumer discretionary ETFs, we see that the sector saw net inflows over the month of November, signaling positive sentiment and liquidity in the sector.

The SPDR S&P Retail ETF (XRT), which has exposure to 100 prominent US retail stocks like Amazon.com (AMZN) and Walmart (WMT), saw a net inflow of $224 million in November, which is around 36.0% of the average market cap of the fund over the period.

The Consumer Discretionary Select Sector SPDR ETF (XLY), which can be considered a proxy for the US consumer discretionary sector and has top holdings in stocks like Amazon.com (AMZN), The Home Depot (HD), and The Walt Disney Company (DIS), saw a net inflow of $245 million over the month.

The inflows have also been affected by a positive outlook for the holiday season ahead for companies in the consumer discretionary sector. Improving labor conditions have been key to investors’ positivity toward the sector.

In the next article, we’ll have a look at the technical indicators in the sector.

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