Such stocks are not usually considered growth fare, but the First Trust Consumer Staples AlphaDEX Fund (FXG) dispels the notion that investing in staples -- companies that provide essential household products and are non-cyclical -- has to be slow-growth and boring.
The First Trust Consumer Staples AlphaDEX Fund takes a different approach to staples investing than popular rivals, such as the Consumer Staples Select Sector SPDR (XLP) and the Vanguard Consumer Staples ETF (VDC). Those two are cap-weighted funds, meaning the holdings are weighted by market cap. That leads to lineups dominated by the likes of P&G, Coca-Cola, PepsiCo (PEP) and other familiar staples stocks.
Differences are even more apparent in returns. While cap-weighted staples funds have delivered returns in the mid-50% area over the past three years, shares of FXG have nearly doubled over that period.
The FXG's 39 holdings are weighted on a combination of growth and value factors, including 3-, 6- and 12-month price appreciation, sales to price and one year sales growth, book value to price, cash flow to price and return on assets, according to the issuer.
That methodology gives FXG a far different look than its rivals. For example, the Consumer Staples Select Sector SPDR devotes almost 28% of its combined weight to P&G, Coca-Cola and Wal-Mart (WMT). In contrast, FXG allocates less than 1.9% to P&G and does not hold shares of Coca-Cola or Wal-Mart.