IYC: A Better Consumer ETF?

 | Dec 04, 2014 07:21AM ET

We are in the final quarter of the year and the holiday season is already here. This is also that time of the year, when the investment world turns to the retail and consumer discretionary space, with ETFs being no exception.

After declining 0.3% in September, retail sales rebounded in October on a healing labor market and rising consumer confidence. Bloomberg noted that the job market is in its best ever shape since 1999.

Plunging oil prices have also favored the consumer discretionary stocks and ETFs. In mid November, the national average price of gasoline hit $2.89 per gallon – the lowest figure recorded since December 2010 (read: Can a Great Holiday Season Rally These Retail ETFs? ).

Overall GDP growth of the U.S. remains pretty bullish.  After expanding at 4.6% in Q2, the economy logged 3.5% growth rate in Q3 injecting further optimism among consumers and investors. All these have taken consumer confidence to the highest level in seven years spreading optimism in the retail sector.

Investors seek to take advantage of the strong trends in the broad space and pour their money into top-notch discretionary and retail ETFs to make the most of them. SPDR Consumer Discr. Select Sector (ARCA:XLY), Vanguard Consumer Discretion (NYSE:VCR), FirstTrust Cons. Discret. AlphaDEX (NYSE:FXD)  and SPDR S&P Retail (NYSE:XRT) are some of the funds that have lately garnered a lot of investor attention.

Is IYC a Better Player?

While the aforementioned ETFs returned smartly in the last four-week period, investors should note that one forgotten product iShares US Consumer Services (NYSE:IYC) returned equally or better than the blue-eyed ETFs of investors.

Over the past one month, IYC has added about 7.7% while XLY, VCR, FXD, and XRT have returned about 6.7%, 6.8%, 7.8% and 7.1%, respectively. From the year-to-date outlook, IYC was up 8.3% while XLY, VCR, FXD, and XRT advanced 4.6%, 4.7%, 6.2% and 3.1%, respectively.