Bigger Not Always Better?

We spoke yesterday of Amazons influence in the XLY, but in the XRT it is much less pronounced at just more than 2%. The more “equal weighting” in the XRT can work against it sometimes, in a diversification sense. Obviously the XLY is more dense, and if the top components are acting well, it will be unmatched in terms of performance. But the XRT is making a name for itself, and a possible comeback of sorts, with some top ten components like STMP W and ETSY higher by 130, 81 and 70% in 2020 respectively. The XRT is still down twice as much from its 52 week high at 16%, than the XLY, but momentum is in its favor over the last one month as the XRT has gained 18%, compared to the XLY up by 12%. It could continue to outshine, although more holdings in the fund will have to keep outperforming, compared to just AMZN and HD having to thrive. Or both sub sectors within discretionary can keep battling it out for supremacy. As I like to say competition in markets, and life, is a good thing.

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