The State Street Consumer Discretionary Select Sector SPDR ETF (XLY) was launched on December 16, 1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - Broad segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways 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 11, placing it in bottom 31%.
Index Details
The fund is sponsored by State Street Investment Management. It has amassed assets over $23.14 billion, making it the largest ETF attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. XLY seeks to match the performance of the Consumer Discretionary Select Sector Index before fees and expenses.
The Consumer Discretionary Select Sector Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.8%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector -- about 100% of the portfolio.
Looking at individual holdings, Amazon.com Inc (AMZN) accounts for about 23.76% of total assets, followed by Tesla Inc (TSLA) and Home Depot Inc (HD).
The top 10 holdings account for about 70.25% of total assets under management.
Performance and Risk
The ETF has lost about 1.19% and is up about 3.39% so far this year and in the past one year (as of 02/09/2026), respectively. XLY has traded between $88.17 and $124.52 during this last 52-week period.
The ETF has a beta of 1.25 and standard deviation of 20.44% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
State Street Consumer Discretionary Select Sector SPDR 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, XLY is a good 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.
iShares U.S. Home Construction ETF (ITB) tracks Dow Jones U.S. Select Home Construction Index and the Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index. iShares U.S. Home Construction ETF has $3.04 billion in assets, Vanguard Consumer Discretionary ETF has $6.20 billion. ITB has an expense ratio of 0.38%, and VCR 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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State Street Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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