Consumer discretionary ETFs, tracking the stocks of those companies which offer goods and services which are desirable to consumers when they have sufficient means, were able to ride out some of the overall downward pressures on the stock market in 2020. While many sectors suffered as a result of the pandemic's pressure on the economy, the consumer discretionary industry plummeted in March, only to rebound strongly for the resulting months of 2020 at an all-time high, as of November 2020. The coming months are likely to bolster this sector even further, as consumer discretionary companies are more likely than many of their rivals to see a boost from holiday shopping.
For investors interested in broad exposure to the consumer discretionary space, exchange-traded funds (ETFs) remain a strong option. Nonetheless, it's crucial that investors choose funds with appropriate strategies to accommodate changes to the sector and to the spending habits of younger generations. Below, we'll explore the best consumer discretionary ETFs in 2020, measured against the S&P Composite 1500 Consumer Discretionary Index, and how the funds themselves performed over the course of the year.
All returns are calculated as of Nov. 6, 2020.
Year to date returns of the S&P Composite 1500 Consumer Discretionary Index.
Amplify Online Retail ETF (IBUY)
The Amplify Online Retail ETF (IBUY) is the top-performing consumer discretionary sector fund for 2020, with returns of 96.58% to date. This fund is a large one, with total assets of $1.1 billion and an expense ratio of 0.65%. Compared to other consumer cyclical funds, the Amplify Online Retail ETF also has about 20% of its assets invested in non-U.S. equities. Approximately 35% of its assets are invested in its top 10 holdings, which is led by Peloton at 5.62%. With the COVID-19 pandemic continuing to rage on, the at-home fitness and cycling equipment company reported that its sales have tripled since March, up about 467%. No doubt skyrocketing demand has also lifted returns for the Amplify Online Retail ETF, ranked a five-star Morningstar fund.
ProShares Online Retail ETF (ONLN)
The ProShares Online Retail ETF (ONLN) also had an astounding year, generating year-to-date returns of 95.54%. As one of the newest ETFs on the market started on July 13, 2018, this fund zeroes in on online retailers and targets companies that principally sell online or through other non-brick-and-mortar channels. It also targets giants like Amazon and Alibaba, its top two holdings comprising 36.36% of the entire portfolio, that it claims are "reshaping the retail space." The ProShares Online Retail ETF has total assets of $732.9 million with an expense ratio of 0.58%.
Fidelity MSCI Consumer Discretionary ETF (FDIS)
With returns of 36.26% to-date in 2020, the Fidelity MSCI Consumer Discretionary ETF (FDIS) claims the third place on the list. This five-star Morningstar fund has a low expense ratio of 0.084% compared to the Amplify Online Retail ETF while matching its total assets under management of $1.1 billion. The passively managed fund focuses primarily on U.S. holdings and outperformed the S&P Composite 1500 Consumer Discretionary Index by 9.42% in 2020 to date.
While diversified with 257 equity holdings, the Fidelity MSCI Consumer Discretionary ETF is still top-heavy: 64% of its assets lie in its top 10 holdings, of which its top slot goes to retail giant Amazon.com, which carries 32% of the portfolio's weight.
Vanguard Consumer Discretionary ETF (VCR)
The fourth position on our list goes to the Vanguard Consumer Discretionary ETF (VCR), which has returned 33.21% to-date in 2020. The largest ETF on this list, this four-star Morningstar fund has total assets of $4 billion, with a relatively low expense ratio of 0.1%. That being said, it is also one of the oldest funds, started in 2004. Similar to the Fidelity MSCI Consumer Discretionary ETF, the Vanguard Consumer Discretionary ETF focuses primarily on U.S. equities with 97.97% of its portfolio invested in it. It also has a similar portfolio to FDIS, with Amazon at 21.83% in the lead, followed by The Home Depot, Tesla, and McDonald's. Its top 10 holdings make up 55% of its assets.
VanEck Vectors Retail ETF (RTH)
Finally, the VanEck Vectors Retail ETF (RTH) closes out the list as the smallest ETF with total assets of $190.6 million. However, the fund isn't to be underestimated as it is reporting returns of 29.89% to-date in 2020, beating the index. RTH is also heavily focused on U.S. companies and invests 73% of its assets in its top 10 holdings: Amazon, The Home Depot, Walmart, Costco, JD.com, Lowe's, Target, CVS, Dollar General, and TJX Companies. Many of these holdings were bought at the fund's inception in December of 2011, and has netted an overall 19.07% return since then. This five-star Morningstar fund has an expense ratio of 0.35%.