Consumer Discretionary Sector: Overview and Funds

Consumer discretionary refers to any consumer spending that is not strictly necessary. This type of spending will typically grow or shrink with the economy, because discretionary products and services are not necessary for basic living. The types of products and services that are considered discretionary include cars, furniture, household appliances, hotels, restaurants, movies, TV, clothing, handbags and shoes.

Within consumer discretionary (sometimes also called consumer cyclicals), there are five industry groups of products and services: automobiles and components, consumer durables and apparel, consumer services, media and retailing. The five main categories above are further divided into industries and sub-industries. For example, consumer services has a sub-category for hotels, restaurants and leisure.

Companies are aligned to the industry and sub-industry that best describes the company. This is identified based on the company’s core products and services or the products and services that generate the most revenue. For example, Walt Disney is considered a media company, even though it owns and operate theme parks and sells apparel. This is because its core products are films, TV shows and TV channels.

Automobiles and Components

The automobile and components industry group includes companies that make cars and motorcycles as well as companies that make auto parts and tires.

IndustrySub-IndustryDescription

Auto Components

Auto Parts & EquipmentCompanies that produce parts and accessories for cars and motorcycles. This excludes companies that make tires and rubber.
Tires & RubberCompanies that manufacture tires and rubber for vehicles.

Automobiles

Automobile ManufacturersCompanies that produce passenger cars and trucks. This excludes companies that make motorcycles and heavy-duty vehicles.
Motorcycle ManufacturersCompanies that produce motorcycles or scooters. This excludes companies that make bicycles.

Examples of companies that make cars and motorcycles include Ford, General Motors, Harley Davidson, Toyota and Honda. Companies that make auto parts and tires include Goodyear and Johnson Controls.

Consumer Durables and Apparel

Consumer durables refer to products that are not repurchased frequently. Sofas, TVs, microwaves and even homebuilding are considered durable products. Consumer apparel companies, for the purposes of this guide, refer specifically to companies that make products such as clothing, accessories, shoes, handbags or luggage, but do not necessarily sell these items directly to the consumer. Categories within consumer durables and apparel include household items, such as electronics, furniture and appliances; leisure products, such as toys and sporting equipment; and textiles and luxury goods, such as clothing, accessories, footwear, luggage and handbags.

Industry

Sub-IndustryDescription

Household Durables

Consumer ElectronicsCompanies that produce consumer electronics, including TVs, game consoles and digital cameras. This excludes companies that make cellphones, PCs and household appliances. Companies that make cell phones and PCs are classified in the information technology sector.
Home FurnishingsCompanies that produce "soft" home furnishings or furniture, including carpets, wall-coverings and upholstery.
HomebuildingCompanies that build residential buildings, such as single family homes, apartment buildings or prefabricated houses.
Household AppliancesCompanies that produce electric household appliances, including dishwashers, microwaves, washing machines, dryers, refrigerators, power tools and electric gardening tools. This excludes companies that make consumer electronics and PCs.
Housewares & SpecialtiesCompanies that produce durable household products, such as cookware, glassware, silverware, dishware and cutlery.
Leisure ProductsLeisure ProductsCompanies that produce leisure products such as sports equipment, bicycles and toys.
Textiles, Apparel & Luxury GoodsApparel, Accessories & Luxury GoodsCompanies that produce clothing, accessories, and luxury goods, including designer handbags, wallets, luggage, jewelry and watches. This excludes companies that make shoes.
FootwearCompanies that produce shoes, including athletic and leather shoes.
TextilesCompanies that produce textiles and related products that are not considered apparel, footwear or home furnishings.

Examples of companies that produce consumer durables and apparel include Whirlpool, LG, Nike, Ralph Lauren, Timex, Mohawk Carpets and Hasbro.

Consumer Services

Consumer services is divided into two broad industries: hotels, restaurants and leisure and everything else ("diversified consumer services"). The hotels, restaurants and leisure industry also includes casinos, travel agencies, cruise lines, fitness centers, stadiums, golf courses and theme parks. Diversified consumer services is essentially all other consumer services that do not fit into the hotel, restaurants and leisure industry. This includes educational services, legal services, interior design, auctions, wedding services, funeral services and home security services.

Industry

Sub-IndustryDescription

Hotels, Restaurants & Leisure

Casinos & GamingCompanies that own and/or operate casinos. This also includes companies that provide lotteries or betting services.
Hotels, Resorts & Cruise LinesCompanies that own and/or operate hotels, resorts and cruise ships. This also includes travel agencies and tour operators.
Leisure FacilitiesCompanies that own and/or operate leisure facilities, such as sports and fitness centers, stadiums, golf courses and theme parks.
RestaurantsCompanies that own and/or operate restaurants, bars, fast-food places and bars. This also includes catering services.
Diversified Consumer ServicesEducation ServicesCompanies that provide educational services, including private universities, correspondence courses, seminars and technical education courses. This excludes firms that provide employee training programs.
Specialized Consumer ServicesCompanies that provide specialized services such as legal, home security, interior design, auctions, wedding or funeral services.

Examples of companies that provide consumer services include Chipotle Mexican Grill, Hyatt Hotels, Planet Fitness, Carnival Cruise Lines, Priceline, Wynn Resorts and McDonald’s.

Media

Within the media industry, there are five sub-industries covering everything from advertising to movies and entertainment. Companies within the media industry are involved in the production and/or distribution of media consumed by the public, including movies, TV shows, advertisements, commercials and books.

Industry

Sub-IndustryDescription

Media

AdvertisingCompanies that offer advertising, marketing or PR services.
BroadcastingCompanies that own and/or operate TV or radio broadcasts, including programming.
Cable & SatelliteCompanies that provide cable or satellite TV. This also includes cable networks. This does not include telecommunications providers.
Movies & EntertainmentCompanies that produce, distribute or screen movies and TV shows or companies that produce or distribute music or other entertainment. This also includes movie theaters and sports teams.
PublishingCompanies that publish newspapers, magazines and books. This includes electronic and print formats.

Examples of media companies include Time Warner Cable, Walt Disney, Twenty-First Century Fox, Viacom (owner of MTV) and Cablevision.

Retailing

The retailing industry group includes the following industries: distributors, internet and catalog retail, multiline retail and specialty retail. Distributors are any companies that distribute or wholesale products, but do not necessarily make them or sell them directly to consumers. They can be thought of as the “middle man” between the company that produces the product and the company that sells the product. Internet and catalog retail includes companies who sell products online, door-to-door, by mail order or on TV. Multiline retail includes companies that sell a variety of products in their stores, whereas specialty retail stores typically sell one type of product.

Industry

Sub-IndustryDescription

Distributors

DistributorsGeneral merchandise distributors and wholesalers (they do not necessarily produce products or sell them directly to consumers). This also includes car distributors.
Internet & Catalog RetailCatalog RetailMail order/catalog retail, TV home shopping and door-to-door retail.
Internet RetailCompanies that sell products online and are not classified elsewhere.
Multiline RetailDepartment StoresDepartment stores.
General Merchandise StoresCompanies that sell general merchandise. This excludes grocery stores and supercenters, which are classified in consumer staples.
Specialty RetailApparel RetailClothing and accessories retail stores.
Computer & Electronics RetailConsumer electronics, PC or video retail stores.
Home Improvement RetailHome improvement and garden stores. This also includes building materials and supply stores.
Specialty StoresSpecialty retail stores, such as jewelry stores, toy stores, office supply stores or book stores.
Automotive RetailCar and car-related stores, including car dealerships, gas stations and auto parts stores.
Home Furnishing RetailFurniture and home furnishing stores, including housewares and interior design stores.

Examples of retail companies include Amazon, Home Depot, Best Buy, Gap, Advance Auto Parts, Office Depot, Barnes & Noble and Macy’s.

Consumer Discretionary Sector ETFs and Mutual Funds

Below we list over 40 different Consumer Discretionary mutual funds, index funds and ETFs that cover various companies in this sector. Most of the funds track a broad array of stocks from the entire Consumer Discretionary sector, but a few specialize in specific sub-industries, such as the automotive or retail industry. Additionally, most of the funds list below either track globally or within the United States. The expense ratios of these funds vary from 0.09% to over 2.50%.

Name

SymbolExpense Ratio

Vanguard Consumer Discretionary Index Fund Admiral Shares

VCDAX0.09%

Vanguard Consumer Discretion ETF

VCR0.10%

Fidelity MSCI Consumer Discretionary Index ETF

FDIS0.12%

Consumer Discretionary Select Sector SPDR ETF

XLY0.14%

PowerShares S&P SmallCap Consumer Discretionary ETF

PSCD0.29%

Market Vectors Retail ETF

RTH0.35%

SPDR S&P Retail ETF

XRT0.35%

Rydex S&P Equal Weight Consumer Discretionary ETF

RCD0.40%

SPDR S&P International Consumer Discretionary Sector ETF

IPD0.40%

iShares U.S. Consumer Services ETF

IYC0.43%

iShares Global Consumer Discretionary ETF

RXI0.47%

PowerShares Dynamic Media ETF

PBS0.59%

PowerShares DWA Consumer Cyclicals Momentum ETF

PEZ0.60%

First Trust Consumer Discretionary AlphaDEX Fund

FXD0.63%

PowerShares Dynamic Leisure & Entertainment Portfolio

PEJ0.63%

PowerShares Dynamic Retail ETF

PMR0.63%

Global X China Consumer ETF

CHIQ0.65%

Market Vectors Gaming ETF

BJK0.65%

First Trust NASDAQ Global Auto ETF

CARZ0.70%

FactorShares Trust The Restaurant ETF

BITE0.75%

Fidelity Select Consumer Discretionary Portfolio

FSCPX0.79%

Fidelity Select Leisure Portfolio

FDLSX0.80%

Fidelity Select Multimedia Portfolio

FBMPX0.81%

Fidelity Select Retailing Portfolio

FSRPX0.81%

Fidelity Select Construction & Housing Portfolio

FSHOX0.82%

Fidelity Select Automotive Portfolio

FSAVX0.85%

Fidelity Advisor Consumer Discretionary Fund Class I

FCNIX0.87%

EGShares India Consumer ETF

INCO0.89%

Fidelity Advisor Consumer Discretionary Fund Class A

FCNAX1.14%

Rydex Retailing Fund Class Investor

RYRIX1.33%

Rydex Leisure Fund Class Investor

RYLIX1.34%

ICON Consumer Discretionary Fund Class S

ICCCX1.43%

Fidelity Advisor Consumer Discretionary Fund Class T

FACPX1.45%

Rydex Leisure Fund Class A

RYLSX1.58%

Rydex Retailing Fund Class A

RYRTX1.58%

Kinetics Internet No Load Class

WWWFX1.82%

Rydex Leisure Fund Class H

RYLAX1.83%

Rydex Retailing Fund Class H

RYRAX1.83%

Fidelity Advisor Consumer Discretionary Fund Class C

FCECX1.90%

ICON Consumer Discretionary Fund Class A

ICCAX1.91%

Fidelity Advisor Consumer Discretionary Fund Class B

FCIBX1.95%

Kinetics Internet Advisor Fund Class A

KINAX2.07%

Rydex Retailing Fund Class C

RYRCX2.34%

Rydex Leisure Fund Class C

RYLCX2.35%

Kinetics Internet Advisor Fund Class C

KINCX2.57%

When purchasing a fund, it’s important to consider factors such as the investment strategy, fund class, fees and charges, historical returns and size of the fund as well as your personal investment strategy.

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