PEZ vs XLY

PEZDInvesco Dorsey Wright Consumer Cyclicals Momentum ETF

XLYAState Street Consumer Discretionary Select Sector SPDR ETF

In short

PEZ Most consumer discretionary funds own the sector by size. PEZ owns the trend: roughly 30 cyclical stocks picked and weighted by price momentum, reshuffled every quarter. Fee is 0.60% net of a waiver through August 31, 2028.

XLY Live since 1998 as one of the original Select Sector SPDRs, XLY bundles the S&P 500's spending-money stocks (cars, couches, burgers, online carts) into one heavily traded ticker at eight basis points.

Stated mandate

PEZ The fund tracks an index designed to identify companies exhibiting relative strength, or momentum, within the consumer cyclicals segment.

XLY The fund seeks to track the performance of the Consumer Discretionary Select Sector Index, providing targeted exposure to companies in the consumer discretionary sector.

Why people hold it

• PEZ The index ranks consumer cyclicals by relative strength, holds at least 30 of them, and reconstitutes every January, April, July and October, so fading names get cut on a schedule.nasdaqomx.com
• Weights come from each stock's momentum score, not its market cap, so the portfolio can reach well past the sector's handful of giants.nasdaqomx.com
• Listed since October 2006, it has run the same Dorsey Wright momentum rules on US consumer cyclicals through multiple consumer cycles. Not a recent launch chasing a theme.

• XLY Charges 0.08% a year, a fraction of the roughly 0.35% typical for consumer discretionary funds, and tied for the cheapest in its peer group.
• A multi-billion-dollar fund and one of the most actively traded in the category, which generally shows up as tight bid-ask spreads for buyers and sellers.
• Plain mandate: S&P 500 consumer discretionary members, with capping rules that stop any single company from swallowing the index. Pays quarterly.spglobal.com
• Trading since December 1998 as one of the first US sector funds, and it still stands among the strongest implementations in its peer group.

Worth knowing

• PEZ Cost sits above the category median: 0.60% net of a waiver through August 31, 2028, against a 0.97% gross ratio, versus 0.08% for XLY and 0.09% for VCR.
• One of the smaller and thinner-traded funds in its category, so the bid-ask spread is a real part of the cost of getting in and out.
• A full quarterly rebuild means heavy turnover and a roster that can look unrecognizable year to year; momentum rules can get whipsawed when sector leadership flips.nasdaqomx.com

• XLY About 50 stocks. Even with the index caps, a small handful of megacaps drives most of the movement.spglobal.com
• S&P 500 members only, so smaller retailers and restaurant chains sit outside the index entirely.spglobal.com
• One sector, and a cyclical one: discretionary spending rises and falls with the economy, and the fund is classified as non-diversified.sec.govbritannica.com

Full PEZ profile⁠

Full XLY profile⁠