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Top 10 Consumer Staples ETFs

Stocks in this article: XLP VDC IYK FXG PSL KXI PBJ

Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication, and nearly 40 years in the investment business, we can help select those ETFs that matter and may or may not be repetitive from one issuer to another. The result is a more manageable list of issues from which to view and make selections.

Consumer Staples are considered as a more defensive and conservative sector due to the essential needs people have for basic goods as noted in the image above. When markets become more volatile, this sector should offer superior relative performance and stability. When markets are trending strongly higher, it's not unusual for the sector to lag while still offering positive returns.  

There is currently an expanding list of 20 ETFs oriented to the consumer staples sector with more on the way. The following analysis features a fair representation of ETFs available. We believe from these investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones, Wisdom Tree, PowerShares, EG Shares and so forth. Also included are some so-called "enhanced" indexes that attempt to achieve better performance through more active management of the index.

Where competitive issues exist and/or repetitive issues available at a fee cost saving we mention those as other choices. New issues are coming to market consistently (especially globally) and sometimes these issues will need to become more seasoned before they may be included at least in our listings.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

 

#1: SPDR Consumer Staples Select ETF (XLP)

XLP covers the Consumer Staples Select Sector Index which includes food and staples retailing, household products, beverages, tobacco and personal products. The fund was launched in December 1998. The expense ratio is .20%. AUM (Assets under Management) equal $4.1 billion with average daily trading volume of 8.5M shares.  As of late July 2011 the annual dividend was $.66 making the current yield 2.05% and YTD return 7.60%.

For traders and investors wishing to hedge, leveraged and inverse issues are available closely matching XLP's performance to utilize from ProShares and Direxion Shares.

 

XLP Top Ten Holdings & Weightings
Data as of November, 2011

  1. The Procter & Gamble Co (PG): 14.32%
  2. Philip Morris International, Inc. (PM): 9.99%
  3. Wal-Mart Stores Inc (WMT): 8.12%
  4. The Coca-Cola Co (KO): 7.48%
  5. Kraft Foods Inc (KFT): 5.06%
  6. Altria Group Inc. (MO): 4.65%
  7. CVS Caremark Corp (CVS): 4.45%
  8. PepsiCo Inc (PEP): 4.08%
  9. Colgate-Palmolive Company (CL): 3.91%
  10. Costco Wholesale Corporation (COST): 3.30%

 

#2: Vanguard Consumer Staples ETF (VDC)

 

VDC follows the MSCI US Investable Market Consumer Staples 25/50 Index covering the entire spectrum of food, personal products, tobacco, beverage, drug stores and mega centers. The fund was launched in January 2004. The expense ratio is .25%. AUM equal $802 million and average daily trading volume is 79K shares. As end of November 2011 the annual dividend yield was 2.47% and YTD return 5.42%.

VDC Top Ten Holdings

Data as of November, 2011

  1. The Procter & Gamble Co (PG): 12.36%
  2. The Coca-Cola Co (KO): 9.48%
  3. Philip Morris International, Inc. (PM): 8.13%
  4. PepsiCo Inc (PEP): 7.51%
  5. Wal-Mart Stores Inc (WMT): 7.01%
  6. Kraft Foods Inc (KFT): 4.31%
  7. Altria Group Inc. (MO): 3.99%
  8. CVS Caremark Corp (CVS): 3.75%
  9. Colgate-Palmolive Company (CL): 3.10%
  10. Walgreen Company (WAG): 2.90%

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