XLY - VCR: Don't Bet Against The American Consumer

2024-01-29 22:47:10 ET

Summary

• The Consumer Discretionary sector is currently unpopular among investment firms, but the Vanguard Consumer Discretionary Index Fund has consistently outperformed the S&P 500.
• The VCR fund is moderately concentrated in its top 10-15 stocks, with about 35% of its assets invested in Amazon and Tesla.
• The fund has outperformed its peers over longer time periods and is expected to benefit from improving macroeconomic conditions and strong consumer spending.

Investment Thesis

As markets complete the first trading month of this year, the Consumer Discretionary sector remains an unpopular sector for investment firms. Bank of America's wealth management arm, Merrill Lynch, issued its outlook for the U.S. Consumer Discretionary sector last month by saying, "We remain underweight, as risks remain for future job cuts and as consumers continue to work down excess savings from the pandemic." Yet, the Vanguard Consumer Discretionary Index Fund ( VCR ) has been consistently outperforming the S&P 500 index ( SP500 ) over the past year....

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