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), Phillip Morris International ( PM), Coca-Cola ( KO), Pepsico ( PEP) 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.
Going deeper, however, it becomes clear where IYK strays from other staples funds. Most telling is the fund's lack of exposure to retailers and pharmaceutical companies such as Wal-Mart ( WMT) and CVS Caremark ( CVX). In other consumer ETFs, these two companies represent some of largest slices of their respective indexes. Interestingly, rather than replacing retailers with other large defensive plays, IYK goes a different route. The instrument enhances its index with exposure to the U.S. automotive industry. Top players including Ford Motors ( F), Borg Warner ( BWA), Harley Davidson ( HOG) and the popular Johnson Controls ( JCI) can all be found among the fund's vast index. In total, car makers and parts manufacturers account for more than 7% of IYK's total portfolio. Though in recent weeks, the troubles facing Toyota ( TM) have put a damper on the broad automobile industry and weighed on IYK's performance. Prior to Toyota's travails, the auto industry had been one of the brightest stars of the nation's economic recovery. The solid performance from Ford and other auto industry constituents helped lift IYK over its competitors in the past year through Feb. 9: IYK gained 30%, while XLP and VDC climbed 21% and 23%, respectively. Due to IYK's unique take on the consumer staples industry, investors holding this fund are exposed not only to the large, stable companies that will hold up well in any market climate, but also the recovering auto industry that still has some gas left in its tank. By playing the likes of Ford and Johnson Controls alongside Proctor & Gamble and Coca-Cola, investors holding IYK have the best of both worlds: stability and growth. -- Written by Don Dion in Williamstown, Mass.