Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
IShares U.S. Consumer Goods ETF IYK provides exposure to a defensive sector. Investors interested in U.S. consumer staples and consumer goods companies should be aware that the space generally produces relative outperformance   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 potential acquisitors the opportunity to get a better handle on the local consumer without becoming steeply indebted.
Emerging markets continue to represent a longer-term growth opportunity for many of the fund's holdings. 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 are more discretionary in nature. As such, it makes this ETF less appropriate as a true nondiscretionary option. Read more 

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