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Consumer staples are considered a more conservative and defensive sector. After all, no matter the economic conditions people still need "stuff" from soap to toothpaste. The earnings growth rate for these companies is more limited due to intensive competition as big box retailers have forced prices to remain lower. Big box retailers (Walmart and others) have also been able to dictate pricing terms to suppliers putting a squeeze on them. This has kept consumer prices lower no matter the pressure it puts on the small drug store around the corner.

A defensive sector like Consumer Staples will outperform when equity markets are more bearish and underperform when bullish. They will trend in the same manner overall but still with less beta or volatility since as indicated, even the worst of times, people will need stuff.

There is a wide array of ETFs devoted to the sector providing U.S. and global exposure. Most are linked to established 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

New issues are coming to market consistently (especially globally) and sometimes these issues will need to become more seasoned before they may be included in our listings.

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 if suitable to your tastes.

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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.

#10:

SPDR

S&P International Consumer Staples ETF (IPS)

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IPS

follows the S&P Developed ex-U.S. BMI Consumer Staples Sector Index which represents non-U.S. consumer staples companies with market capitalizations of at least $100 million. The fund was launched in July 2008. The expense ratio is .50%. AUM equal $18 million and average daily trading volume is 10K shares.

As of mid-February 2012 the annual dividend yield was 2.72% and YTD 1.44%. The one year return was 8.59%.

Data as of First Quarter 2012

IPS Top Ten Holdings & Weightings

    Nestle SA (NESN): 15.42%

    British American Tobacco PLC (BATS): 7.02%

    Unilever NV (UNA): 4.67%

    Diageo PLC (DGE): 4.59%

    Anheuser-Busch InBev SA (AHBIF): 3.92%

    Unilever PLC (ULVR): 3.68%

    Wesfarmers Limited (WES): 3.49%

    Danone (BN): 3.33%

    Tesco PLC (TSCO): 3.15%

    Imperial Tobacco Group PLC (IMT): 3.10%

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    #9:

    Rydex

    S&P Equal Weight Consumer Staples ETF (RHS)

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    RHS follows the S&P Equal Weight Consumer Staples Index which as the name implies just breaks down the same sector ETF as XLP into equal weights. The fund was launched in November 2006. The expense ratio is .50%. AUM equal $30 million with average daily trading volume of 7K shares.

    The fund has struggled from a marketing perspective given company ownership changes which left it adrift for a period. This could now change with new ownership. As of mid-February 2012 the annual dividend yield was 2.77% and YTD 1.05%. The one year return was 14.72%.

    Data as of First Quarter 2012

    RHS Top Ten Holdings & Weightings

      Whole Foods Market, Inc. (WFM): 2.59%

      CVS Caremark Corp (CVS): 2.58%

      Estee Lauder Cos Inc A (EL): 2.51%

      Avon Products Inc (AVP): 2.50%

      Safeway Inc. (SWY): 2.48%

      Beam Inc (BEAM): 2.47%

      Constellation Brands Inc. A (STZ): 2.47%

      Clorox Company (CLX): 2.47%

      Wal-Mart Stores Inc (WMT): 2.46%

      Coca-Cola Enterprises Inc (CCE): 2.45%

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      #8:

      PowerShares

      Dynamic Consumer Staples ETF (PSL)

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      PSL

      follows the Dynamic Consumer Staples Sector Intellidex Index which is considered an "enhanced" index since it uses proprietary quantitative analysis to more actively deploy and manage constituents. Of some interest are the more even weightings of the holdings versus others already listed. The fund was launched in October 2010. The expense ratio is .60%. AUM equal $38 million with average daily trading volume of 7K shares. As of mid-February 2012 the annual dividend yield was 1.48% and YTD 1.70%. The one year return was 11.94%.

      Another choice from the same sponsor is PSCC which follows the S&P SmallCap 600 Consumer Staples Index. The fund was launched in April 2010. Its expense ratio is .29%. AUM equal $13 million and average daily trading volume is 10K shares. As of late July 2011 the yield was just under 3% and YTD return 5.87%.

      Data as of First Quarter 2012

      PSL Top Ten Holdings & Weightings

        CVS Caremark Corp (CVS): 2.54%

        Philip Morris International, Inc. (PM): 2.52%

        Procter & Gamble Co (PG): 2.51%

        Kraft Foods Inc (KFT): 2.50%

        Altria Group Inc. (MO): 2.50%

        HJ Heinz Company (HNZ): 2.48%

        Coca-Cola Co (KO): 2.48%

        Kimberly-Clark Corporation (KMB): 2.46%

        Colgate-Palmolive Company (CL): 2.44%

        General Mills, Inc. (GIS): 2.42%

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        #7:

        PowerShares

        Dynamic Food & Beverage ETF (PBJ)

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        PBJ ETF follows the Dynamic Food & Beverage Intellidex Index which another "enhanced" index from PowerShares that is more active in using quantitative analysis to select and manage the index. The fund was launched in June 2005.

        The expense ratio is .60%. AUM equal $130 million and average daily trading volume is 135K shares. As of mid-February 2012 the annual dividend yield was .96% and YTD 1.88%. The one year return was 7.75%.

        Data as of First Quarter 2012

        PBJ Top Ten Holdings & Weightings

          The Hershey Company (HSY): 5.09%

          Kroger Co (KR): 4.99%

          McDonald's Corporation (MCD): 4.97%

          Kraft Foods Inc (KFT): 4.97%

          HJ Heinz Company (HNZ): 4.93%

          Coca-Cola Co (KO): 4.93%

          General Mills, Inc. (GIS): 4.82%

          Mead Johnson Nutrition Company (MJN): 4.42%

          Cal-Maine Foods, Inc. (CALM): 2.92%

          B&G Foods Inc (BGS): 2.90%

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          #6:

          First Trust

          Consumer Staples ETF (FXG)

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          FXG

          follows the StrataQuant Consumer Staples Index which is another "enhanced" index which employs the AlphaDEX stock selection methodology to select consumer staples stocks from the Russell 1000. The fund was launched in May 2007. The expense ratio is .70%.

          AUM equal $205 million with average daily trading volume of 185K shares. As of mid-February 2012 the annual dividend yield was .76% and YTD 2.79%. The one year return was 12.19%.

          Data as of First Quarter 2012

          FXG Top Ten Holdings & Weightings

            Smithfield Foods, Inc. (SFD): 5.58%

            Tyson Foods, Inc. A (TSN): 5.33%

            Hormel Foods Corporation (HRL): 4.86%

            Whole Foods Market, Inc. (WFM): 4.78%

            Hansen Natural Corporation (MNST): 4.73%

            Herbalife, Ltd. (HLF): 4.32%

            Archer-Daniels Midland Company (ADM): 4.14%

            Constellation Brands Inc. A (STZ): 4.12%

            Kroger Co (KR): 3.96%

            ConAgra Foods, Inc. (CAG): 3.91%

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            #5:

            EG Shares

            DJ Emerging Market Consumer ETF (ECON)

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            ECON follows the Dow Jones Emerging Markets Titans Index which is a market cap weighted index of the 30 leading emerging market companies in both consumer goods and services.  The fund was launched in September 2010. The expense ratio is .85%. AUM equal $352 million and average daily trading volume is 140K shares.

            As of mid-February 2012 the annual dividend yield was .53% and YTD return 8.28%. The one year return was 11.92%.

            Data as of First Quarter 2012

            ECON Top Ten Holdings & Weightings

              Companhia de Bebidas das Americas Ambev ADR (ABV): 11.17%

              Naspers Ltd (NPN): 7.97%

              Wal - Mart de Mexico, S.A.B. de C.V. (WALMEX V): 7.69%

              Astra International Tbk (ASII): 7.58%

              BRF - Brasil Foods SA ADR (BRFS): 6.34%

              Fomento Economico Mexicano SAB de CV (FEMSA UBD): 6.10%

              Grupo Televisa, S.A. (TLEVISACPO): 4.65%

              S.A.C.I. Falabella (FALABELLA): 4.42%

              TheStreet Recommends

              Cencosud SA (CENCOSUD): 4.19%

              Genting Bhd (3182): 3.92%

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              #4:

              iShares

              S&P Global Consumer Staples ETF (KXI)

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              KXI

              follows the S&P Global Consumer Staples Index which includes the U.S. and other nation's consumer staples issues. The fund was launched in September 2006. The expense ratio is .48%. AUM equal $459 million and average daily trading volume is 42K shares.

              As of mid-February 2012 the annual dividend yield was 2.36% and YTD return 1.47%. The one year return was 12.51%.

              Data as of First Quarter 2012

              KXI Top Ten Holdings & Weightings

                Nestle SA (NESN): 7.72%

                Procter & Gamble Co (PG): 7.06%

                Coca-Cola Co (KO): 6.25%

                Philip Morris International, Inc. (PM): 5.30%

                Wal-Mart Stores Inc (WMT): 4.37%

                PepsiCo Inc (PEP): 4.18%

                British American Tobacco PLC (BATS): 3.69%

                Kraft Foods Inc (KFT): 2.76%

                Altria Group Inc. (MO): 2.38%

                Unilever NV (UNA): 2.33%

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                #3:

                iShares

                DJ U.S. Consumer Goods ETF (IYK)

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                IYK follows the Dow Jones U.S. Consumer Goods Index. The fund was launched in June 2006. The expense ratio is .48%. AUM equal $380 million and average daily trading volume is 48K shares. As of mid-February 2012 the annual dividend yield was 2.09% and YTD return 4.06%. The one year return was 11.27%.

                An alternative choice is the

                FocusShares

                Morningstar Consumer Defensive ETF (FCD) which is a venture of Scottrade and Morningstar featuring a lower expense ratio (.19%) and no trading commissions for Scottrade customers. You'll no doubt see something similar coming from Schwab soon enough.

                Data as of First Quarter 2012

                IYK Top Ten Holdings & Weightings

                Data as of First Quarter 2012

                  Procter & Gamble Co (PG): 11.79%

                  Coca-Cola Co (KO): 9.60%

                  Philip Morris International, Inc. (PM): 8.94%

                  PepsiCo Inc (PEP): 6.99%

                  Kraft Foods Inc (KFT): 4.27%

                  Altria Group Inc. (MO): 4.03%

                  Ford Motor Co (F): 3.15%

                  Monsanto Company (MON): 2.99%

                  Colgate-Palmolive Company (CL): 2.76%

                  Nike, Inc. B (NKE): 2.67%

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                  #2:

                  Vanguard

                  Consumer Staples ETF (VDC)

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                  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 $931 million and average daily trading volume is 96K shares. As of mid-February 2012 the annual dividend yield was 2.35% and YTD return 1.49%. The one year return was 14.82%

                  Data as of First Quarter 2012

                  VDC Top Ten Holdings & Weightings

                    The Procter & Gamble Co (PG): 12.82%

                    The Coca-Cola Co (KO): 9.96%

                    Philip Morris International, Inc. (PM): 7.85%

                    Wal-Mart Stores Inc (WMT): 6.87%

                    PepsiCo Inc (PEP): 6.77%

                    Altria Group Inc. (MO): 4.37%

                    Kraft Foods Inc (KFT): 4.37%

                    CVS Caremark Corp (CVS): 3.55%

                    Colgate-Palmolive Company (CL): 3.39%

                    Costco Wholesale Corporation (COST): 2.81%

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                    #1:

                    SPDR

                    Consumer Staples Select Sector ETF (XLP)

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                    SPDR Consumer Staples Select Sector ETF 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 .19%.

                    AUM (Assets under Management) equal $4.9 billion with average daily trading volume of 7M shares. As of mid-February 2012 the annual dividend yield was 2.77% and YTD return 1.05%. The one year return was 14.72%

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

                    Data as of First Quarter 2012

                    XLP Top Ten Holdings & Weightings

                      Procter & Gamble Co (PG): 13.78%

                      Philip Morris International, Inc. (PM): 10.32%

                      Wal-Mart Stores Inc (WMT): 8.52%

                      Coca-Cola Co (KO): 7.14%

                      Kraft Foods Inc (KFT): 5.38%

                      CVS Caremark Corp (CVS): 4.84%

                      Altria Group Inc. (MO): 4.64%

                      PepsiCo Inc (PEP): 4.10%

                      Colgate-Palmolive Company (CL): 3.81%

                      Costco Wholesale Corporation (COST): 3.15%

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                      Below is the methodology for ranking the ETFs within the category.

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                      Strong established linked index

                      Excellent consistent performance and index tracking

                      Low fee structure

                      Strong portfolio suitability

                      Excellent liquidity

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                      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

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                      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

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                      Index is new

                      Issue is new and needs seasoning

                      Fees are high

                      Portfolio suitability also needs seasoning

                      Liquidity below average

                      The consumer staples sector enjoyed a positive first half of 2011 but corrected with the overall market in the second half of the year. Since late November 2011 the market has recovered sharply and is now overbought as of this early 2012 report.

                      The consumer sector is marked by positive demographics overseas in emerging markets which has made ECON attractive even with the greater volatility. With the latter investors need to adopt more agile tactics as they should with enhanced index related ETFs.  

                      There is a lot to choose from in terms of indexes linked to ETFs. Some are passive and duplicative relatively. It's essential to remember it's really a game of battleship for sponsors seeking to be first to a sector space or just being competitive in the space. This is their business interest apart from your investment interest. You should always ignore their interests and align your choices with what serves your objectives best.

                      New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

                      For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at

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                      The ETF Digest has no current positions in any of the featured ETFs.

                      (Source for data is from ETF sponsors and various ETF data providers.)

                      This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

                      Dave Fry is founder and publisher of

                      ETF Digest

                      , Dave's Daily blog and the best-selling book author of

                      Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management

                      , published by Wiley Finance in 2008. A detailed bio is here:

                      Dave Fry.