Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
IShares U.S. Consumer Goods ETF IYK provides exposure to a relatively defensive sector. It offers exposure to mega-cap household names whose products consumers generally continue to buy regardless of the economic climate.  Read more 

Bull Case

Companies held in this fund generally have stable revenue growth and cash flows.
We expect that one use for consumer staples firms' excess cash will be for smaller, bolt-on deals, which we view positively as they would offer acquisitors the opportunity to get a better handle on the local consumer without having to incur significant financial leverage.
Emerging markets continue to represent a longer-term growth opportunity for many of the firms held in this ETF. Read more 

Bear Case

The 0.43% expense ratio is higher than those of some other consumer-focused ETFs.
Some of the fund's holdings, such as tobacco stocks, have been or could be the targets of costly product liability suits.
The index provider's methodology includes some subsectors, such as autos and personal goods, that we deem to be more discretionary in nature. As such, it makes this ETF less appropriate as a true nondiscretionary option. Read more 

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