When it comes to low-risk investing strategies, consumer staples ETFs are a popular option. That’s because companies that manufacturer or sell essential goods like packaged foods or toothpaste are sure to have stable sales regardless of the ups and downs of the broader economy. Furthermore, exchange-traded funds (ETFs) that hold a collection of a few dozen leading stocks can be an effective way to play the biggest names in consumer staples in a single, cost-effective way.
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The following seven leading ETFs are all established ways to play the sector, each with more than $400 million in total assets under management. They are sleepier investments than some of the most popular tech stocks, that’s for sure. But investors looking to protect their nest egg rather than grow it aggressively may find these picks a good fit:
| ETF | Expense Ratio |
| Consumer Staples Select Sector SPDR Fund (ticker: XLP) | 0.09% |
| Vanguard Consumer Staples ETF (VDC) | 0.10% |
| iShares U.S. Consumer Staples ETF (IYK) | 0.40% |
| Fidelity MSCI Consumer Staples Index ETF (FSTA) | 0.084% |
| iShares Global Consumer Staples ETF (KXI) | 0.41% |
| First Trust Consumer Staples AlphaDEX Fund (FXG) | 0.63% |
| Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) | 0.40% |
Consumer Staples Select Sector SPDR Fund (XLP)
Assets under management: $15.7 billion Annual expense ratio: 0.09%, or $9 on every $10,000 invested
The largest of the consumer staples ETFs available to U.S. investors, XLP holds roughly 40 of the largest brands in the sector. That includes personal care giant Procter & Gamble Co. (PG), warehouse retailer Costco Wholesale Corp. (COST) and beverage icon Coca-Cola Co. (KO). With a weighted average market capitalization of more than $235 billion across its holdings, this is definitely a fund that’s focused on the most established and deep-pocketed consumer staples stocks out there.
Vanguard Consumer Staples ETF (VDC)
Assets under management: $6.7 billion Annual expense ratio: 0.10%
A hair more expensive in annual fees and a tad smaller in total assets, VDC is another respected consumer staples ETF worth considering. It holds a wider array of companies with just over 100 positions at present, but with many similar top holdings. The median market cap is “only” $92 billion thanks to the broader diversification of this fund versus the prior option, but you’ll still be invested in the biggest and most familiar names out there.
iShares U.S. Consumer Staples ETF (IYK)
Assets under management: $1.2 billion Annual expense ratio: 0.40%
Another major consumer-focused fund, IYK veers the other way with major emphasis on a short list of names. The lineup is similar with the same mega-cap multinational companies at the top of the list, but despite having 55 total holdings, about two-thirds of all fund assets are concentrated in the 10 largest picks. Furthermore, there’s almost 40% in the top three alone — Procter & Gamble, Coca-Cola and PepsiCo Inc. (PEP). It’s a bit pricier from an annual fee perspective, but is still a good option for investors looking to play the most established stocks in the sector.
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Fidelity MSCI Consumer Staples Index ETF (FSTA)
Assets under management: $1.1 billion Annual expense ratio: 0.084%
The most affordable fund in the sector, FSTA is worth mentioning even though it is yet another slight variant on the same theme of mega-cap consumer staples stocks. Top positions among its 100 or so portfolio holdings are quite similar, save for Walmart Inc. (WMT) being in the top three instead of a little farther down the list. Any of the prior funds are all well established, with more than $1 billion in total assets, and all are reasonably cost-effective. But if you truly want the absolute cheapest consumer staples ETF, this Fidelity offering takes the cake.
iShares Global Consumer Staples ETF (KXI)
Assets under management: $860 million Annual expense ratio: 0.41%
Looking outside the U.S., KXI offers a stake in the biggest consumer staples companies in the world. About 60% of assets are in the aforementioned U.S. firms that dominate Wall Street, but the rest of the fund is focused on similar companies in developed markets around the globe. That includes Switzerland’s Nestle SA (NSRGY), France’s L’Oreal SA (LRLCY) and other names that are very recognizable to U.S. investors and consumers despite a headquarters overseas. If you want a bit of geographic diversification, this fund is a great way to play the top 100 consumer names out there.
First Trust Consumer Staples AlphaDEX Fund (FXG)
Assets under management: $430 million Annual expense ratio: 0.63%
Taking a decidedly different approach, this AlphaDEX fund is an actively managed approach to the sector that seeks out the best consumer staples stocks based on quantitative metrics such as price appreciation, sales growth, return on assets and other data points. There are about 40 total holdings right now, including pet food leader Freshpet Inc. (FRPT), agribusiness giant Bunge Global SA (BG) and health care products firm McKesson Corp. (MCK). The list is a bit less conventional than the other large-cap offerings with familiar names, but this is an attractive option to some investors considering the biggest consumer staples firms are often the most sluggish. There’s more risk here, to be sure, but also the potential for stocks to move a bit more quickly if things go well.
Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS)
Assets under management: $400 million Annual expense ratio: 0.40%
If you’re not particularly interested in picking subsets of the consumer staples sector then this equal-weight fund may be worth considering. As the name implies, this Invesco consumer staples ETF does not pick favorites and evenly spreads its assets around the 40 or so leading consumer staples stocks. So while you still get a foothold in the companies that dominate other funds, you aren’t overly reliant on the big dogs like P&G. Other firms like cigarette leader Altria Group Inc. (MO) and packaged foods icon Archer-Daniels Midland Co. (ADM) are roughly the same percentage of the portfolio, and the fund regularly rebalances to ensure the mix stays mostly the same over the long run. If you want serious diversification across this low-risk sector, RSPS is your best option.
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7 Best Consumer Staples ETFs originally appeared on usnews.com
Update 06/21/24: This story was previously published at an earlier date and has been updated with new information.
