This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Consumer ETF Takes Different Route

Stocks in this article: XLP VDC IYK

NEW YORK ( TheStreet) -- Thanks to our implicit desire to meet basic needs and feed addictions, consumers will continue to flock to stores to fill up on staples like toilet paper, cigarettes and other necessities, whether we are in the midst of market turmoil or economic prosperity.

ETF investors looking for a strong defensive play on some of the largest companies that profit from our predictable buying habits should look no further than the various consumer staples ETFs available.

Today, investors can choose from a number of large, liquid offerings from some of the largest providers of exchange traded funds. Funds such as the Consumer Staples Select Sector SPDR Fund (XLP) and the Vanguard Consumer Staples ETF (VDC) provide investors with ample exposure to the companies that produce the products we can't live without.

My pick for playing this industry right now is the iShares Dow Jones U.S. Consumer Goods Index Fund (IYK).

IYK is neither the cheapest nor the most liquid of the consumer staples ETFs available. However, I believe that the fund's underlying holdings provide investors with the best play on this defensive industry with an added twist that primes it for great upside. Additionally, with a 2.4% yield, IYK provides investors with a nice flow of income no matter which way the fund and market moves.

Most of IYK's portfolio, like other consumer staples ETFs, is dominated by its top holdings which include stable giants such as Procter & Gamble (PG - Get Report), Phillip Morris International (PM - Get Report), Coca-Cola (KO - Get Report), Pepsico (PEP - Get Report) and Altria (MO).

Together, the fund's top holdings account for more than 60% of the fund's total portfolio. Other notable firms like HJ Heinz (HNZ), Mattel (MAT) and Energizer (ENR) can also be found among IYK's underlying index.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,430.06 +42.85 0.25%
S&P 500 2,032.66 +3.11 0.15%
NASDAQ 4,707.8160 +26.3190 0.56%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs