3 Consumer Discretionary ETFs Poised to Gain More
During the first half of 2022, the consumer discretionary sector was one of the primary drags hindering the broader market and growth-heavy index, with the likes of Amazon (AMZN) and Tesla (TSLA) in the market.
This scenario is quite the reverse, with the S&P 500 Consumer Discretionary Index rising 16.70% in July. Still, the index has been placed in a bear market, as highlighted by a year-over-year loss of 20.35%, but the recovery has to start somewhere and July is a turnaround for consumer discretionary equities and exchange-traded funds. Could mark the start of a rebound.
Furthermore, consumer discretionary ETFs are relevant today because of how and where consumers are spending their money.
“We anticipate that the current divergence in spending on goods and services will return to its pre-pandemic trends by mid-2023,” said Morningstar analyst Dave Secera. “This equates to a swing of about $450 billion, and the change could be even bigger. Many households could be saturated with goods across multiple categories in which consumers drive future demand. In addition, the consumer epidemic can compensate for the services left during the
In other words, some of the following consumer discretionary ETFs may be valid considerations for the remainder of 2022.
Goldman Sachs Futures Consumer Equity ETF (GBUY)
The Goldman Sachs Futures Consumer Equity ETF (GBUY) is unique among ETFs in this category because it is actively managed and is not dedicated to consumer cyclical stocks. In fact, it is GBUY’s second largest sector allocation, not the top one. Still, GBUY, one of the newer funds in this group, could be a strong idea in the long term.
GBUY’s status as an actively managed fund and the point that it is not based on a consumer discretionary stock means that the ETF has broadness and the ability to quickly adapt to new consumer trends — an important point because many of them Trends are emerging today.
According to Goldman Sachs Asset Management (GSAM), “With nearly five billion people under the age of 40 worldwide, Millennials, and increasingly, Generation Z, are the world’s most powerful consumer force.” “Their collective income already eclipses that of all other generations and as a result, they are increasing in spending and are poised to dominate the consumer landscape for decades to come.”
VanEck Gaming ETF (BJK)
The VanEck Gaming ETF (BJK) is the basic ETF dedicated to casino stocks, making it a clear industry-level playout among consumer discretionary ETFs. After all, spending money on gambling is a symbol of consumer discretionary spending.
There has been some sort of disconnect this year with many gaming stocks as domestic casino revenues are on a brisk pace and Nevada setting records, many BJK constituents falling amid high inflation and worries the recession could deepen.
Still, there’s opportunity here, especially with gaming supplier stocks and the potential for industry consolidation.
“Clearly, the market is still focused on the risk to come, once consumers exit ‘summer travel/holiday’ mode, or the Fed proves unable to execute a soft landing, inflation budgets.” Ultimately only time will tell, although the market is narrowing the gap in geographic and customer risk, we see relative value in manufacturers,” Stifel analyst Jeffrey Stantial wrote in a recent report.
Global X Millennials Thematic ETF (MILN)
The Global X Millennials Thematic ETF (MILN) has a clear demographic focus, but the fund is applicable to a wider swath of investors because millennial spending trends are attractive and the demographic is more populous than baby boomers.
Due to its millennial leanings, it is arguably a cutting-edge consumer discretionary ETF, providing access to lucrative trends such as social commerce.
“Social commerce differs from traditional e-commerce because instead of making purchases on dedicated e-commerce websites, it allows users to make purchases within the social media platforms they use regularly. According to Global X Research, such an approach reduces friction, allows users to comment or consult with friends digitally, and enables hyper-targeted advertising and a custom shopping experience.
The views and opinions expressed here are the views and opinions of the author and do not necessarily represent those of Nasdaq, Inc.