Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
First Trust Consumer Discretionary AlphaDEX is suitable for a complementary satellite holding to a diversified portfolio. This exchange-traded fund, which holds a variety of names tied to discretionary consumer spending,  Read more 

Bull Case

Consumer confidence is on the rise, equity market valuations are up, and the job market is improving.
This ETF offers much more of a mid-cap tilt than do other consumer discretionary ETFs. As such, we believe it provides purer exposure to the U.S. consumer discretionary sector than do some of its peers, whose holdings include firms with meaningful overseas businesses.
The consumer discretionary sector is undervalued right now relative to other U.S. equity sectors. Read more 

Bear Case

Aside from being heavily dependent on disposable household income and consumer spending, the firms in this portfolio are also susceptible to changes in demographics and fickle consumer tastes.
This ETF meaningfully underperformed traditional cap-weighted consumer discretionary ETFs in 2011 and 2012 and more or less matched their performance in 2013.
This ETF's expense ratio is relatively high for a sector ETF. Read more 

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A Cheap, Large-Cap Fund to Put on Your Watchlist 
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