Consumer Cyclicals Sector 2Q18: Best And Worst
David Trainer | May 07, 2018 09:32AM ET
The Consumer Cyclicals sector ranks seventh out of the 11 sectors as detailed in our here .
Figure 1 ranks from best to worst the eight Consumer Cyclicals ETFs that meet our liquidity standards, and Figure 2 shows the five best and worst-rated Consumer Cyclicals mutual funds. Not all Consumer Cyclicals sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 25 to 370). This variation creates drastically different investment implications and, therefore, ratings.
Investors seeking exposure to the Consumer Cyclicals sector should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.
Our Robo-Analyst technology[2] We think advisors and investors focused on prudent investment decisions should include analysis of fund holdings in their research process for ETFs and mutual funds.
Figure 1: ETFs with the Best & Worst Ratings
* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
First Trust NASDAQ Retail ETF (FTXD), Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), and PowerShares S&P Small Cap Consumer Discretionary Portfolio (PSCD) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5
* Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
ICON Consumer Discretionary Fund (ICCCX, ICCAX) and Rydex Leisure Fund (RYLIX, RYLAX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
State Street SPDR S&P Retail ETF (MX:XRT) is the top-rated Consumer Cyclicals ETF and Fidelity Select Multimedia Portfolio (FBMPX) is the top-rated Consumer Cyclicals mutual fund. XRT earns a Very Attractive rating and FBMPX earns an Attractive rating.
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iShares U.S. Consumer Services ETF (IYC) is the worst rated Consumer Cyclicals ETF and Rydex Retailing Fund (RYRTX) is the worst rated Consumer Cyclicals mutual fund. ICY earns a Neutral rating and RYRTX earns a Very Unattractive rating.
445 stocks of the 3000+ we cover are classified as Consumer Cyclicals stocks.
The Danger Within
Buying a fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on fund holdings is necessary due diligence because a fund’s performance is only as good as its holdings’ performance. Don’t just take our word for it, see what Barron’s says on this matter.
PERFORMANCE OF HOLDINGs = PERFORMANCE OF FUND
Analyzing each holding within funds is no small task. Our Robo-Analyst technology enables us to perform this diligence with scale and provide the At BlackRock, Machines Are Rising Over Managers to Pick Stocks ) are now embracing technology to leverage machines in the investment research process. Technology may be the only solution to the dual mandate for research: cut costs and fulfill the fiduciary duty of care. Investors, clients, advisors and analysts deserve the latest in technology to get the diligence required to make prudent investment decisions.
Figures 3 and 4 show the rating landscape of all Consumer Cyclicals ETFs and mutual funds.
Figure 3: Separating the Best ETFs From the Worst ETFs
Sources: New Constructs, LLC and company filings
Figure 4: Separating the Best Mutual Funds from the Worst Mutual Funds
Sources: New Constructs, LLC and company filings
Disclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, sector or theme.
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