by winston » Fri Aug 26, 2016 12:04 pm
ETFs You Can Own Forever: Consumer Discretionary Select Sector SPDR Fund (XLY)
SSGA-SPDR-GLD-logoWhat I Like: Demographics, income
Expenses: 0.14%
“Life, Liberty and the Pursuit of Happiness” constitutes a uniquely American perspective that has created a generational engine of growth unlike any other country in the world.
By creating an inclusive environment which attracts talented and motivated entrepreneurs (Mr. Trump, are you listening?) free of regulation and onerous taxes (ahem, Ms. Clinton?), the U.S. produces 24.4% of world GDP with just 4.5% of the world’s population.
This is an incredible testament to U.S. productivity, which speaks loud and clear of the American Dream.
While oil-rich countries with smaller populations like Kuwait and Norway can claim higher per capita figures, the average American household earns $53,657 per year. More importantly, Americans spend approximately two-thirds of this income consuming products and services (the balance goes to taxes and savings).
There’s a reason why former Fed Chair Alan Greenspan called Wal-Mart Stores, Inc. (NYSE:WMT) each month to track consumer expenditures.
So as I reflect on what I want to own forever, I want an index that allows me to participate both in aggregate growth and aggregate spending, since in the U.S. the are synonymous.
As demographics rise, so do stocks. Companies are feeding, clothing supplying and sustaining a rising and more productive population.
My ETF of choice in to reflect this intertwining of expansion and consumption is the Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY). It’s the undisputed leader among the 19 ETFs providing exposure to the consumer discretionary sector.
XLY ranks No. 1 in five- and 10-year performance, at annual returns of 17.25% and 11.36%, respectively. It’s also the most liquid, with an average daily trading volume of 7.2 million shares. Finally, it’s one of the most efficient, charging a fee of just 0.14% per annum.
XLY is 39% retail, 20% media and 18% Internet (which I suspect will grow over the next five to 10 years, most likely at the expense of retail as they merge ever closer).
The balance of the fund is distributed across auto, apparel and entertainment. Amazon.com, Inc. (NASDAQ:AMZN) is the largest holding at 12.6%. The 88 components also include big names like Walt Disney Co (NYSE:DIS), McDonald’s Corporation (NYSE:MCD) and Nike Inc (NYSE:NKE).
Source: Investor Place
It's all about "how much you made when you were right" & "how little you lost when you were wrong"