English Language & Usage Stack Exchange is a question and answer site for linguists, etymologists, and serious English language enthusiasts. It only takes a minute to sign up.
Sign up to join this community
I can't get my head around the exact meaning of the word "discretionary" in this context.
My dictionary says that "discretionary" is an adjective that means "decided according to the judgment of a person in authority" but I can see that here it is used as a noun and probably with unrelated meaning?
It is an expression used in finance to indicate the consumer segment that is subject to the discretion of consumers, to contrast with consumer staples.
Discretionary in the sense of:
left to individual choice or judgment: exercised at one's own discretion
available for discretionary use: discretionary income.
(M-W)
- is the term given to goods and services that are considered non-essential by consumers, but desirable if their available income is sufficient to purchase them. Consumer discretionary goods include durable goods, apparel, entertainment and leisure, and automobiles. The purchase of consumer discretionary goods is also influenced by the state of the economy, which can affect consumer confidence.
(www.investopedia.com)
I work in Financials and "consumer discretionary" refers to large ticket items such as cars, appliances, electronics, etc. which the general public might purchase when they have surplus cashflow. When the economy is stalled and interest rates are high there is a notable drop in the consumer discretionary sector. Consumer discretionary is also used by stock market analysts to guage which way the economy is moving, along with housing starts (new builds), and employment stats. The "Consumer Discretionary" highlighted on your chart is part of that particular mutual fund investment and is showing you how much of the mutual fund is invested in that sector.
