Should You Invest in the iShares U.S. Consumer Discretionary ETF (IYC)?

The iShares U.S. Consumer Discretionary ETF (IYC) was launched on 06/12/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - Broad segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $992.33 million, making it one of the largest ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. IYC seeks to match the performance of the Dow Jones U.S. Consumer Services Index before fees and expenses.

The Russell 1000 Consumer Disc 40 Act 15/22.5 Daily Capped Index measures the performance of the consumer services sector of the U.S. equity market.

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 0.40%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.64%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Discretionary sector--about 70.70% of the portfolio. Telecom and Consumer Staples round out the top three.

Looking at individual holdings, Amazon Com Inc (AMZN) accounts for about 15.09% of total assets, followed by Tesla Inc (TSLA) and Home Depot Inc (HD).

The top 10 holdings account for about 51.54% of total assets under management.

Performance and Risk

So far this year, IYC has added about 2.88%, and is up about 21.59% in the last one year (as of 04/25/2024). During this past 52-week period, the fund has traded between $62.69 and $82.04.

The ETF has a beta of 1.16 and standard deviation of 21.90% for the trailing three-year period, making it a medium risk choice in the space. With about 182 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Consumer Discretionary ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IYC is a reasonable option for those seeking exposure to the Consumer Discretionary ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $5.32 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $19.20 billion. VCR has an expense ratio of 0.10% and XLY charges 0.09%.

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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iShares U.S. Consumer Discretionary ETF (IYC): ETF Research Reports

Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

The Home Depot, Inc. (HD) : Free Stock Analysis Report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports

Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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