iShares US Consumer Focused ETF

IEDI

Market cap $28.6M

Consumer spending has held up well despite economic headwinds. The state of inflation and the labor market will be key to watch.

The LSEG Retail/Restaurant Index reported Q1 2026 earnings growth of 27.2%. Retail earnings in the first quarter of 2026 received a significant boost from a historic tax refund season, reinforcing consumer spending at a time when the labor market remained resilient. Q2 2026 earnings are currently expected to mark the weakest growth rate of the year, with consensus forecasts calling for a gradual improvement during the second half of the year.

Retail sales dropped 0.9% in May, but select sectors like online, apparel, and furniture retail defied the downturn with gains. ETFs like ONLN, RTH, XRT and IEDI should benefit.

iShares U.S. Consumer Focused ETF offers a unique, AI-driven approach of consumer discretionary, with a more defensive profile than traditional ETFs in this sector. While IEDI has average fundamentals, it has historically delivered superior risk-adjusted performance compared to competitors. IEDI has a few drawbacks: low assets under management, limited liquidity, portfolio concentration, and recent underperformance.

Retail sales grew at a slower pace than Wall Street had expected in December.

The Fed minutes infused some optimism as most officials favored a September rate cut if inflation continued to cool. Sector ETFs, which are the major beneficiaries of a rate cut, rallied to new 52-week highs.

To date, 145 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2024, representing 73% of the index. The blended revenue growth estimate for the 199 companies in this index is 3.5% for Q2 2024. Home Depot reported better-than-expected Q2 earnings and revenue.

These ETF investing areas should see an uptick in business this Easter.

Walmart (WMT) spread strong optimism by reporting robust fourth-quarter fiscal 2024 results, providing a big boost to its annual dividend and unveiling the $2.3 billion takeover of smart TV maker Vizio (VZIO).

Americans are expected to shell out $25.8 billion on Valentine's Day this year, an average of $185.81 per person. Investors seeking to capitalize on the splurge should invest in consumer discretionary and retail ETFs.