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Best Consumer Staples ETFs for Q2 2022

Consumer staples products are those that consumers are unwilling or unable to cut out of their budgets, regardless of their financial difficulties or the state of the economy. The category includes products like food and beverages, household goods, and hygiene products, as well as alcohol and tobacco. These types of goods are considered basic necessities that consumers will buy in good or bad economic times. Thus, consumer staples stocks tend to be relatively more stable and less volatile compared to other segments of the equity markets. Investors looking for broad exposure to the consumer staples sector might look to exchange-traded funds (ETFs) focused on this area.

Key Takeaways

The consumer staples sector outperformed the broader market over the past year.The consumer staples exchange-traded funds (ETFs) with the best one-year trailing total returns are XLP, FXG, and FSTA.The top holding of the first and third of these ETFs is Procter & Gamble Co., and the top holding of the second is Archer-Daniels-Midland Co.

There are 11 consumer staples ETFs that trade in the U.S., excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). The consumer staples sector, as measured by the S&P 500 Consumer Staples Sector Index, has outperformed the broader market over the past 12 months, with a total return of 20.3% compared to the S&P 500’s total return of 18.7%, as of Jan. 28, 2022. The best-performing consumer staples ETF, based on performance over the past year, is the Consumer Staples Select Sector SPDR Fund (XLP). We examine the three best consumer staples ETFs below. All numbers below are as of Jan. 28, 2022.

Consumer Staples Select Sector SPDR Fund (XLP)

Performance Over One-Year: 18.6%Expense Ratio: 0.12%Annual Dividend Yield: 2.48%Three-Month Average Daily Volume: 15,222,445Assets Under Management: $14.8 billionInception Date: Dec. 16, 1998Issuer: State Street

XLP invests in companies that are engaged in the development and production of consumer products, including beverages, food, tobacco, drugs, and household and personal products. Focused on consumer staples companies, the ETF provides investors with exposure to a segment of the U.S. equity market that may perform well during an economic downturn. It follows a blended strategy, investing in a mix of growth and value stocks of mostly large cap companies. The fund’s top three holdings are Procter & Gamble Co. (PG), a multinational consumer goods company; PepsiCo Inc. (PEP), a multinational food, snack, and beverage company; and Coca-Cola Co. (KO), a multinational beverage company.

First Trust Consumer Staples AlphaDEX Fund (FXG)

Performance Over One-Year: 17.9%Expense Ratio: 0.63%Annual Dividend Yield: 1.37%Three-Month Average Daily Volume: 37,555Assets Under Management: $313.7 millionInception Date: May 8, 2007Issuer: First Trust

FXG tracks the StrataQuant Consumer Staples Index, which gauges the performance of a group of around 40 of the highest-ranked consumer staples stocks from the Russell 1000 according to a set of growth and value factors. The ETF provides exposure to food producers, drug and grocery stores, and beverage, tobacco, and personal care products companies. Most of its holdings are food producers. The fund follows a blended strategy of investing in a mix of value and growth stocks with a range of market capitalizations. Its top three holdings are Archer-Daniels-Midland Co. (ADM), a multinational food processing and commodities trading company; Conagra Brands Inc. (CAG), a consumer packaged goods holding company; and Bunge Ltd. (BG), an agribusiness and food company.

Fidelity MSCI Consumer Staples Index ETF (FSTA)

Performance Over One-Year: 17.0%Expense Ratio: 0.08%Annual Dividend Yield: 2.34%Three-Month Average Daily Volume: 116,100Assets Under Management: $935.4 millionInception Date: Oct. 21, 2013Issuer: Fidelity

FSTA seeks to track the MSCI USA IMI Consumer Staples Index, which gauges the performance of consumer staples stocks within the U.S. equity market. The ETF provides exposure to a broad range of consumer staples companies. Its biggest exposures are of companies within the following industries: food and staples retailing, beverages, food, and household products. The fund holds primarily large cap value stocks, but it also includes some mid caps as well as small and micro caps. FSTA’s top three holdings are Procter & Gamble, Coca-Cola, and PepsiCo.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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