XLY — XLY | S&P 500 Consumer Discretionary Sector ETF 13F holdings and portfolio analysis

Following the baseline means accepting a very top-heavy discretionary portfolio with little optimization benefit. The top 5 holdings are 57.74%, top 10 are 70.69%, and top 20 are 85.44%, with AMZN at 22.95% and TSLA at 20.76% as the dominant risks. In the baseline artifact, annualized return is 12.94% and total return is 233.36%, but alpha is -1.08 and beta is 1.09, so investors got strong absolute compounding without meaningful benchmark outperformance. The artifact also notes 7,648 trades and total estimated cost of 1.5332, so even a plain replication still involves implementation drag over time.

The recent baseline trade-off is best illustrated by the sharp loss in 2025-01-31 and 2025-09-30 versus the rebound in 2025-04-30 and 2025-07-31. The baseline lost -8.73% in 2025-01-31 against SPY’s -2.79% and lost -2.50% in 2025-09-30 against SPY’s +2.05%, showing how concentration can hurt badly in weak months. But it also gained +8.40% in 2025-04-30 versus SPY’s +6.28% and +4.57% in 2025-07-31 versus SPY’s +2.05%, showing the upside when discretionary leaders rebound. Those swings fit the baseline beta of 1.09 and max drawdown of -39.39%.

The next check should be whether you are comfortable with concentration, drawdown, and negative alpha all at once. The baseline has top-5 concentration of 57.74%, beta of 1.09, alpha of -1.08, and max drawdown of -39.39%, so the portfolio is not giving clear excess return for the single-name and cyclical risk it takes. Users should also inspect the two biggest holdings, AMZN and TSLA, because they together account for 43.71% of assets and can overwhelm the rest of the basket. Finally, compare that profile with the combo equal-weight screen, which improved total return to 250.20 and alpha to +0.64, even though it also increased drawdown to -45.30%.