Summary
- The Consumer Cyclicals sector ranks eighth in Q4'19.
- Based on an aggregation of ratings of the 445 stocks in the Consumer Cyclicals sector.
- XLY is our top-rated Consumer Cyclicals ETF and FSRPX is our top-rated Consumer Cyclicals mutual fund.
- Looking for a portfolio of ideas like this one? Members of Value Investing 2.0 get exclusive access to our model portfolio. Get started today »
The Consumer Cyclicals sector ranks eighth out of the 11 sectors as detailed in our Q4'19 Sector Ratings for ETFs and Mutual Funds report. Last quarter, the Consumer Cyclicals sector ranked sixth. It gets our Neutral rating, which is based on an aggregation of ratings of the 445 stocks in the Consumer Cyclicals sector. See a recap of our Q3'19 Sector Ratings here.
Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the sector. Not all Consumer Cyclicals sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 22 to 300). This variation creates drastically different investment implications and, therefore, ratings.
Investors seeking exposure to the Consumer Cyclicals sector should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.
Our Robo-Analyst technology[1] empowers our unique ETF and mutual fund rating methodology, which leverages our rigorous analysis of each fund’s holdings.[2] We think advisors and investors focused on prudent investment decisions should include analysis of fund holdings in their research process for ETFs and mutual funds.
Figure 1: ETFs with the Best and Worst Ratings - Top 5
- Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
Eight ETFs (FTXD, RCD, PMR, IEDI, RTH, JHMC, PEZ, PSCD) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.
Figure 2: Mutual Funds with the Best and Worst Ratings
- Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity.
Sources: New Constructs, LLC and company filings
XLY is the top-rated Consumer Cyclicals ETF and FSRPX is the top-rated Consumer Cyclicals mutual fund. Both earn a Very Attractive rating.
PBS is the worst rated Consumer Cyclicals ETF and ICCAX is the worst Consumer Cyclicals mutual fund. They both earn an Unattractive rating.
445 stocks of the 2,850-plus we cover are classified as Consumer Cyclicals stocks.
The Danger Within
Buying a fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on fund holdings is necessary due diligence because a fund’s performance is only as good as its holdings’ performance. Don’t just take our word for it, see what Barron’s says on this matter.
Performance of Holdings = Performance of Fund
Analyzing each holding within funds is no small task. Our Robo-Analyst technology enables us to perform this diligence with scale and provide the research needed to fulfill the fiduciary duty of care. More of the biggest names in the financial industry (see At BlackRock, Machines Are Rising Over Managers to Pick Stocks) are now embracing technology to leverage machines in the investment research process. Technology may be the only solution to the dual mandate for research: Cut costs and fulfill the fiduciary duty of care. Investors, clients, advisors and analysts deserve the latest in technology to get the diligence required to make prudent investment decisions.
Figures 3 and 4 show the rating landscape of all Consumer Cyclicals ETFs and mutual funds.
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