Growth within the U.S. economy rebounded in the first quarter this year, beating analysts’ expectations of 2.5 percent growth with a 3.2 percent growth number. Will this spur a move for investors into more cyclical sectors as opposed to more defensive sectors like consumer staples?
The GDP figure represents the strongest rate of growth for the first quarter in four years and matches the 3.2 percent growth experienced a year ago.
“While the (first quarter) boost from net trade and state and local government spending is unlikely to be repeated in [the second quarter], the main message is that private consumption and investment are slowing down only gradually,” said Brian Coulton, chief economist at Fitch Ratings, in a statement.
Exports helped to drive growth in the first quarter as a a decline in imports and higher inventory investment offset weaker consumer spending and business investment, according to the Commerce Department on Friday.
“The upside beat was helped by net trade (exports jumped while imports contracted sharply) and inventories which combined contributed almost 170 bps of the rise,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Personal spending though, the biggest component was up just 1.2%, two tenths more than expected as an increase in spending on services and nondurable goods offset a decline in spending on durable goods.”
Nonetheless, for investors who are unsure about this upbeat figure given that there’s still a lingering fear of slower global economic growth, they can look to consumer staples exchange-traded funds (ETFs).
Here are 10 of the biggest in terms of total assets via ETFdb.com (click the fund for research, charts and associated data):
|Symbol||ETF Name||Total Assets (in thousands of U.S. Dollars)|
|XLP||Consumer Staples Select Sector SPDR Fund||$11,112,569.06|
|VDC||Vanguard Consumer Staples ETF||$4,764,670.96|
|KXI||iShares Global Consumer Staples ETF||$746,787.80|
|FSTA||Fidelity MSCI Consumer Staples Index ETF||$481,772.86|
|IYK||iShares U.S. Consumer Goods ETF||$458,667.80|
|RHS||Invesco S&P 500® Equal Weight Consumer Staples ETF||$423,674.75|
|FXG||First Trust Consumer Staples AlphaDEX Fund||$320,035.53|
|PSL||Invesco DWA Consumer Staples Momentum ETF||$173,100.00|
|PBJ||Invesco Dynamic Food & Beverage ETF||$70,669.56|
|PSCC||Invesco S&P SmallCap Consumer Staples ETF||$65,011.60|
AUM as of April 26, 2019.
Other ETFs for the Consumer vs. Defensive Angle
For investors looking for continued upside in U.S. cyclical sectors over defensive sectors, the Direxion MSCI Cyclicals Over Defensives ETF (NYSEArca: RWCD) offers them the ability to benefit not only from cyclical sectors potentially performing well, but from their outperformance compared to defensive sectors.
Conversely, if investors believe that U.S. defensive sectors will outperform cyclical sectors, the Direxion MSCI Defensives Over Cyclicals ETF (NYSEArca: RWDC) provides a means to not only see defensive sectors perform well, but a way to capitalize on their outperformance compared to cyclical sectors.
For more market trends, visit ETF Trends.
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