Vanguard Consumer Discretionary ETF Down 18% in 2025: A Buying Opportunity?

Vanguard Consumer Discretionary ETF (VCR) has plunged 18.3% year-to-date due to its high exposure to cyclical sectors such as hotels, resorts, and cruise lines, which are vulnerable to economic cycles. Amazon and Tesla, making up over 35% of the fund, have also contributed to the decline. Despite this, long-term investors may consider buying VCR as it offers diversification and low expense ratios, with a focus on growth, income, and value themes.

The Vanguard Consumer Discretionary ETF (VCR) has experienced a significant decline this year, falling by 18.3% year-to-date, as of April 25, 2025. This downturn can be attributed to the fund's high exposure to cyclical sectors such as hotels, resorts, and cruise lines, which are particularly vulnerable to economic cycles and fluctuations in consumer spending [2].

The consumer discretionary sector, which includes companies like Amazon and Tesla, has been a double-edged sword. While low interest rates and economic expansion can drive consumer spending and growth, rising interest rates and fears of a recession can strain earnings and stock prices. This volatility has been evident in the sector's performance, with the Vanguard Consumer Discretionary ETF experiencing a notable decline [2].

Amazon and Tesla, which together make up over 35% of the fund, have significantly contributed to the decline. Amazon has fallen by over 21% year-to-date, while Tesla has dropped by just over 41%. Additionally, hotels, resorts, and cruise lines, which make up 8.7% of the ETF, have also been negatively impacted, with Royal Caribbean Cruises, Carnival, and Norwegian Cruise Line down 14%, 28%, and 36% respectively [2].

Despite these challenges, long-term investors may consider the Vanguard Consumer Discretionary ETF as an opportunity. The fund offers diversification across multiple sectors and themes, including growth, income, and value. Its low expense ratios also make it an attractive option for investors seeking to gain exposure to the consumer discretionary sector [1].

However, investors should be cautious about the high concentration of the fund in Amazon and Tesla. For those already invested in these companies or seeking less exposure to these two stocks, the Vanguard Growth ETF (VUG) may be a better alternative, as it provides exposure to multiple megacap growth stocks within the consumer discretionary sector [2].

In conclusion, while the Vanguard Consumer Discretionary ETF has experienced a significant decline this year, long-term investors may find it to be a solid addition to their portfolios. However, it is essential to carefully consider the fund's high concentration in Amazon and Tesla and evaluate whether it aligns with your investment goals and risk tolerance.

References:
[1] https://finance.yahoo.com/quote/VCR/performance/
[2] https://finance.yahoo.com/news/vanguard-etf-plunges-18-2025-092000257.html