ITBETF

XLY, a passively managed ETF tracking the Consumer Discretionary sector, has lost 3.57% year-to-date and 1.55% over the past year as of October 20, 2026. With a low expense ratio of 0.08% and $22.37 billion in assets, it offers diversified exposure but carries medium risk with a beta of 1.24. The fund received a Zacks ETF Rank of 3 (Hold), with alternatives like VCR and ITB also available for consumer discretionary exposure.

The iShares U.S. Home Construction ETF (ITB) is reviewed as a passively managed fund tracking the home construction sector with $2.56 billion in assets. However, it receives a Zacks ETF Rank of 4 (Sell) due to high risk (beta of 1.27), concentrated holdings, and poor year-to-date performance of -9.15%. Better alternatives include Vanguard Consumer Discretionary Index Fund (VCR) and State Street Consumer Discretionary Select Sector SPDR ETF (XLY), which offer lower expense ratios and broader diversification.

Rising Treasury yields have pushed mortgage rates above 7%, the highest in over two years, severely impacting homebuilders. The iShares U.S. Home Construction ETF is down 9.9% in the past month, with major holdings like D.R. Horton, PulteGroup, and Lennar all declining significantly. Multiple factors including energy prices, growing U.S. debt, and tech company bond issuance suggest yields will remain elevated, making homebuilder stocks unattractive near-term investments.