Get your fill of consumer staples stocks.
Consumer staples stocks are among the best in the market if you’re looking for absolute bottom-line security. Yes, these stocks can offer moss-like growth, and they can fluctuate between risk-on markets and rushes to safety. But it’s difficult to argue with the pure stability offered by companies that produce gotta-have-’em goods, whether it’s food and drink, or personal hygiene products such as toilet paper and toothpaste. Those looking to stash away several consumer staples stocks should consider exchange-traded funds, which allow you to invest in the sector via a number of angles.
Consumer Staples Select Sector SPDR Fund (ticker: XLP)
The XLP is the gold standard of staples stocks, boasting nearly $9 billion in assets and 10 million shares traded daily, making it the biggest and most liquid sector play by leaps and bounds. The XLP is also a narrow, concentrated ETF that only holds 39 stocks, and allocates 30 percent of its weight to just three stocks — Procter & Gamble Co. (PG), Philip Morris International (PM) and Coca-Cola Co. (KO). It’s basic consumer staples exposure, offering a modest 2.4 percent in dividends (still better than the Standard & Poor’s 500 index) for a cheap 14 basis points annually.
Expenses: 0.14 percent, or $14 annually per $10,000 invested
Fidelity MSCI Consumer Staples Index (FSTA)
Fidelity’s FSTA is a little more diverse in that it holds 100 stocks to XLP’s 39, primarily because it doesn’t limit itself to S&P 500 stocks representing the sector. But that diversity is admittedly lost to a still top-heavy structure that sees the top holdings fall at about 63 percent of holdings, which is similar to the XLP. There are some slight differences, such as PepsiCo (PEP), warranting a 7.8 percent weight versus 4.9 percent in the XLP, but otherwise, FSTA provides very similar exposure. Where it stands out is expenses, which at 8 basis points are as cheap as staples funds get.
Expenses: 0.08 percent
PowerShares Dynamic Food & Beverage Portfolio ETF (PBJ)
The PBJ is a more focused play on the food-and-beverage subset of the consumer staples space. This fund further weeds out stocks by screening for metrics such as earnings momentum, value and even “management action.” The fund’s 29 holdings are a diverse group, though, whose top weights go to wine, beer and spirits conglomerate Constellation Brands (STZ), chocolatier Hershey Co. (HSY), food processing giant Archer Daniels Midland Co. (ADM) and food service leader Sysco Corp. (SYY). While this fund still features a wide lineup of stable companies, you do sacrifice income, with a much thinner yield of 1.2 percent.
Expenses: 0.08 percent
PowerShares S&P SmallCap Consumer Staples Portfolio ETF (PSCC)
If you’re looking for stability, why target small caps? Growth, of course! The PSCC has a knack for putting together rip-roaring runs that outpace its larger counterparts, such as in 2013 when it returned 43 percent to the XLP’s 26 percent, or last year, when PowerShares’ fund rocketed 28 percent higher versus just 5 percent gains for the large-cap SPDR staples fund. Still, despite PSCC’s small-cap nature, companies like B&G Food (BGS) that boast the Cream of Wheat and Ortega brands, and WD-40 Co. (WDFC) show that you don’t have to be huge to have staying power.
Expenses: 0.29 percent
Global X Health & Wellness Thematic ETF (BFIT)
The last of the purely U.S.-based consumer staples funds is also the least pure, with just about 30 percent of the fund dedicated to the sector. Still, it’s worth considering because of its powerful overall theme of improving health habits. BFIT invests in sports apparel companies such as Adidas AG, bike and outdoor equipment manufacturer Shimano and global foods giant Danone AG. This fund also has pop potential, as evidenced by top holding WhiteWave Foods Co. (WWAV), an organic-focused food and beverage firm that spiked 20 percent when it Danone bought it out.
Expenses: 0.68 percent
iShares Global Consumer Staples ETF (KXI)
The KXI is a “global” fund (read: international and U.S. holdings) that’s just more than half-weighted in American stocks, with most of the rest of the 97-stock portfolio invested in developed-market consumer staples plays. This fund is a who’s who of the consumer multinational world, coupling American favorites such as P&G, Coke and Pepsi with Swiss foods conglomerate Nestle SA, Dutch-British dual-listed giant Unilever (UL) — which spans names from Dove and Axe to Lipton and Hellman’s — and Lucky Strike parent British American Tobacco PLC (BTI). Perhaps the only complaint about KXI is its expense ratio, which is high for such a straightforward portfolio.
Expenses: 0.47 percent
SPDR S&P International Consumer Staples Sector ETF (IPS)
Those wanting a purely international set of staples could look toward the IPS, which feels like the KXI if you were to back out its American exposure. Here, the U.K. is represented at nearly a quarter of the fund, followed by Japan (19 percent) and Switzerland (14 percent). In fact, this fund is decidedly developed, providing no exposure to even larger emerging countries such as China or Brazil. Unsurprisingly, top holdings feature the likes of Nestle, BAT and Unilever, as well as beer giant Anheuser-Busch InBev (BUD) and Diageo PLC (DEO), a wide-ranging alcohol company whose brands include Smirnoff, Johnnie Walker and Guinness.
Expenses: 0.4 percent
Columbia Emerging Markets Consumer ETF (ECON)
Where you will find China — and Brazil, and a host of other emerging-market countries — is Columbia’s ECON, which you might recognize as the former EGShares Emerging Markets Consumer ETF. Columbia Management Investment Advisers bought out Emerging Global Advisors in 2016, and folded all its ETFs under the Columbia banner. ECON is a 30-holding fund that spans 11 countries, including South Africa and China at 23 and 20 percent, respectively. Importantly, this is a consumer ETF, with staples making up 44 percent of the fund — so it’s not a pure play. But it is an excellent investment in the growth of emerging markets’ expanding middle classes.
Expenses: 0.85 percent
Global X Brazil Consumer ETF (BRAQ)
While Brazil makes up just about 11 percent of the ECON, you can get the whole feijoada via Global X’s BRAQ. This fund is a basket of roughly 30 staples and discretionary stocks, featuring the likes of Localiza Rent a Car, clothing department store Lojas Renner and Ambev SA (ABEV), which sells beer and non-alcoholic beverages across Latin America. The BRAQ is thinly traded and boasts just $5.6 million in assets, but it’s enjoying a renaissance over the past year, up 37 percent to outperform the iShares MSCI Brazil Capped ETF (EWZ, 34 percent) by a few percentage points, and the XLP (4 percent) by a ton.
Expenses: 0.77 percent
More from U.S. News
8 Times When You Should Sell a Stock
9 Under-the-Radar Ways to Buy Financial Stocks
6 ETFs That Let You Buy Micro-Cap Stocks
9 Ways to Buy Stocks That Everyone Needs originally appeared on usnews.com
