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Bob Carey
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  Consumer Stocks Have Delivered Strong Performance Over The Past 25 Years
Posted Under: Sectors
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View from the Observation Deck 

  1. Today's blog post compares total returns for the S&P 500 Index (broader market) versus a 50/50 split between the S&P 500 Consumer Discretionary Index and the S&P 500 Consumer Staples Index.
  2. The 50/50 split outperformed the S&P 500 Index in 7 of the 8 periods featured in the table. The S&P 500 Consumer Discretionary Index also outperformed the S&P 500 Index in 7 of the 8 periods, while the S&P 500 Consumer Staples Index outperformed in 6 of the 8 periods.
  3. The one occasion in which the S&P 500 Index outperformed the 50/50 split was for the 12-month period ended 4/28/17 (see chart).
  4. For the 25-year period ended 4/28/17, the 50/50 split posted an average cumulative total return of 1,028.43%, 175.73 percentage points higher than the 852.70% cumulative total return posted by the S&P 500 Index, according to Bloomberg.
  5. Why target consumer stocks? Historically, consumer spending has been credited with generating as much as 67% to 70% of U.S. gross domestic product (GDP). That stat is derived from U.S. personal consumption expenditures, which stood at 68.7% at the end of 2016, according to Haver Analytics.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index comprised of companies spanning 31 subsectors in the consumer discretionary sector. The S&P 500 Consumer Staples Index is a capitalization-weighted index comprised of companies spanning 12 subsectors in the consumer staples sector.

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Posted on Thursday, May 11, 2017 @ 1:07 PM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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