Consumer Sector ETFs: XLY Offers Deeper Liquidity, While FDIS Provides Broader Diversification
Key Points
Fidelity MSCI Consumer Discretionary Index ETF and State Street Consumer Discretionary Select Sector SPDR ETF carry identical expense ratios of 0.08%
State Street Consumer Discretionary Select Sector SPDR ETF holds a much more concentrated portfolio of 48 stocks compared to the 274 positions in the Fidelity fund
Both ETFs are heavily weighted toward Amazon.com and Tesla, though the State Street fund has higher concentration in these top names
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The Fidelity MSCI Consumer Discretionary Index ETF (NYSEMKT:FDIS) offers broader diversification across hundreds of holdings, while the State Street Consumer Discretionary Select Sector SPDR ETF (NYSEMKT:XLY) provides concentrated exposure to large-cap leaders.
These funds target the consumer cyclical sector, capturing companies that rely on discretionary spending and economic strength. While the Fidelity fund tracks a broader index that includes hundreds of smaller firms, the State Street fund focuses exclusively on large-cap leaders in the S&P 500. Investors may choose based on their preference for broad market representation versus blue chip concentration.
Snapshot (cost & size)
| Metric | XLY | FDIS |
|---|---|---|
| Issuer | SPDR | Fidelity |
| Expense ratio | 0.08% | 0.08% |
| 1-yr return (as of 2026-05-27) | 13.00% | 12.70% |
| Dividend yield | 0.70% | 0.70% |
| Beta | 1.22 | 1.25 |
| AUM | $22.8 billion | $1.8 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both ETFs are highly cost-efficient, with expense ratios of 0.08%, well below the average for sector-specific funds. This low-cost structure helps minimize the drag on performance. Additionally, both funds offered identical trailing-12-month dividend yields of 0.70% as of May 27, 2026.
Performance & risk comparison
| Metric | XLY | FDIS |
|---|---|---|
| Max drawdown (5 yr) | (39.70%) | (39.20%) |
| Growth of $1,000 over 5 years (total return) | $1,465 | $1,385 |
What's inside
The Fidelity MSCI Consumer Discretionary Index ETF (FDIS) launched in 2013 and holds 274 stocks. Its portfolio is composed of 97.00% consumer cyclical, 1.00% consumer defensive, and 1.00% technology stocks. Its largest positions include Amazon.com (NASDAQ:AMZN) at 24.15%, Tesla (NASDAQ:TSLA) at 17.83%, and Home Depot (NYSE:HD) at 4.53%. The Fidelity fund has a trailing-12-month dividend of $0.74 per share.
In contrast, the State Street Consumer Discretionary Select Sector SPDR ETF (XLY), launched in 1998, holds 48 stocks. It consists of 98.00% consumer cyclical, 1.00% communication services, and 1.00% technology stocks. Its largest positions include Amazon.com at 27.38%, Tesla at 20.21%, and Home Depot at 5.12%. This fund paid $0.89 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
The Fidelity MSCI Consumer Discretionary Index ETF (FDIS) and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) are both consumer sector exchange-traded funds (ETFs). Here is how they stack up against one another.
First, let’s start with XLY. This fund holds fewer than 50 stocks. Indeed, two stocks, Amazon and Tesla, comprise nearly 50% of its overall holdings. The remaining half of its exposure is spread across other consumer sector mainstays, like McDonald’s, Starbucks, and Marriott. As for performance, the XLY has delivered a total return of 46% over the last five years, equating to a compound annual growth rate (CAGR) of 7.9%. That trails the benchmark S&P 500, which has registered a total return of 92% over the same period, with a CAGR of 13.9%.
Turning to costs and income potential, XLY boasts an affordable expense ratio of just 0.08%. However, its dividend yield of 0.7% could leave many income-oriented investors wanting more. Finally, with over $22 billion in AUM, liquidity shouldn’t be a concern for investors seeking to buy or sell shares.
Then, there’s FDIS. This fund holds far more stocks than XLY — about 275 in total. While Amazon and Tesla still make up a significant share of total holdings (about 41%), FDIS spreads its risk more than XLY. Most of FDIS’s top holdings are the same as XLY, although the overall weightings are different, due to FDIS’s larger number of holdings. As for performance, FDIS has delivered a total return of 38% and a CAGR of 6.7% over the last five years — slightly lower than XLY’s 46% and 7.9%. FDIS’s expense ratio and dividend yield are identical to XLY, 0.08% and 0.7%, respectively. As for size, FDIS is much smaller, with about $1.8 billion in AUM.
In summary, most investors will likely prefer XLY due to its better performance, deeper liquidity, and larger holdings of Amazon and Tesla. However, other investors may prefer the broader diversification offered by FDIS.
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Jake Lerch has positions in Amazon, McDonald's, and Tesla. The Motley Fool has positions in and recommends Amazon, Home Depot, Starbucks, and Tesla. The Motley Fool recommends Marriott International and recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.
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