The U.S. stock market in 2024 is shining brightly! The U.S. stock market has always been said to be led by technology and supported by consumption. Among them, the constituents of the S&P 500 Consumer Select Index are mostly world-class consumer giants with extremely strong risk resistance. The Invesco Great Wall S&P Consumer ETF (159529) is the only fund in the market that tracks this index and is worth investors' close attention.

The best time to plant a tree was ten years ago, and the second best is now, which is also true for investment.

Recently, Tesla has attracted enough attention, thanks to the good second quarter financial report, it has risen strongly for 10 days, and its market value once exceeded 836 billion U.S. dollars. (Statistical period: July 1, 2024 - July 15, 2024, data source: WIND)

In the U.S. stock market, Tesla is considered a consumer stock.

The U.S. stock market has always been said to be led by technology and supported by consumption.

After the technology boom, it's time to look at consumption.

At present, the Federal Reserve's signal to cut interest rates is obvious, so the industry generally expects a good overall performance of the U.S. consumer sector in the medium and long term.

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How to configure with one click? The Invesco Great Wall S&P Consumer ETF (159529) is a fund with a large number of Tesla shares in China. In addition to Tesla, the top ten heavy positions of this fund also include consumer giants, such as Coca-Cola, Amazon, Pepsi, etc.

Funds with a lot of "Tesla content"

Where the market is, the capital is!Since the beginning of July, the U.S. stock market has been on an upward trend, with Tesla becoming a favored target for capital. Data shows that in the last 10 trading days, Tesla's stock price has risen by more than 27%. (Data source: WIND; Statistical period: July 1, 2024 - July 15, 2024)

Some investors have expressed their sentiments on relevant platforms, saying, "This stock is about to truly enter take-off mode."

Many investors are also eager to try their hand, but the threshold for buying U.S. stocks is relatively high. Based on this, purchasing QDII (Qualified Domestic Institutional Investor) or similar products is a preferred choice. Invesco Great Wall's S&P Consumer ETF (159529) is one of the funds with a substantial "Tesla quotient" in the domestic market.

According to the fund's first-quarter report for 2024, Tesla is the second-largest holding in the S&P Consumer ETF (159529), with a weight of 11.64%.

Many institutions are optimistic about Tesla's subsequent performance.

Cathie Wood, known as "Woodie," the head of U.S. Ark Investment Management, said that as Tesla gradually launches its Robotaxi business, it will drive its stock price to rise about tenfold.

Stifel also gave Tesla (TSLA.US) a "buy" rating for the first time, with a target price of $265. The investment bank pointed out that the electric vehicle manufacturer benefits from having a vast global supply chain, coupled with the cost advantages of internal manufacturing support and strong profit margins.

In addition to Tesla, world-class consumer giants such as Amazon, Coca-Cola, Pepsi, McDonald's, and Walmart are also among the top ten holdings of this fund.

Among them, Coca-Cola and Procter & Gamble, which are heavily held by the S&P Consumer ETF (159529), were previously heavily invested in by Warren Buffett, with the former being his top holding for 15 consecutive years.

It is reported that the fund tracks the S&P 500 Consumer Select Index, which is extremely outstanding compared to other mainstream global indices. Specifically, the index's 10-year increase is 153.25%, and the increases of other indices are far behind in comparison.It is rare that the S&P 500 Consumer Select Index has maintained a relatively robust performance. Over the past decade, its maximum drawdown was 28.02%, while the drawdown of other indices was mostly above 35%.

S&P New High Consumption is Expected

Jin Huang, the fund manager of the S&P Consumer ETF, pointed out that in terms of market conditions, choosing an index that best represents the U.S. stock market or the overall U.S. economy, the S&P 500 Index, has recently set the longest consecutive rise record since February of this year and reached a historical closing high on July 16th. The S&P 500 Consumer Select Index also set a new high since February 2022. This reflects the increased confidence of consumers in the future market, and even against the backdrop of slowing economic growth, the consumer sector still performs well.

Specifically, regarding investment targets, fund manager Jin Huang stated that S&P consumer companies can be roughly divided into three categories. He detailed that:

The first category is growth stocks that have both technology and consumer attributes, such as Amazon and Tesla. These two companies are classified as discretionary consumption in the S&P 500 industry classification and perform better during the economic recovery phase because their performance growth is highly elastic and their valuation repair speed is fast.

The second category is industry leaders with a solid position and stable growth, such as Home Depot, Lowe's, Nike, Starbucks, and Mose BBQ. On the one hand, their growth exceeds the overall growth rate of U.S. consumption; on the other hand, the annual share buybacks and dividend contributions of the companies are more than 5%, thus ensuring the stability of investment returns. The third category is some necessary consumer companies, which, although not highly growth-oriented, have strong moats, strong profitability, and ROIC maintained around 15%.

"Dividends and buybacks are a very important part of the total return. They show strong defensiveness during macroeconomic fluctuations, as their stable operations, abundant cash flow, and stable dividends make them more favored by investors," Jin Huang, the fund manager, further added.

According to recent news, the U.S. CPI in June further weakened, coupled with Powell's "dovish" speech, which opened the "door" for the Federal Reserve to cut interest rates. The market's expectation for a rate cut in September has risen to 90%, making the rate cut a "high probability event." The expectation of interest rate cuts has driven the rotation of U.S. stocks, and funds have begun to differentiate and seek lower valuation sectors, rather than unanimously doing long on the seven major technology stocks represented by large technology stocks.

Investors who are optimistic about U.S. stocks can pay attention to the S&P Consumer ETF (159529).Investing in funds carries risks, and caution is advised. The past performance of a fund manager's products does not guarantee future results.