The S&P 500 is running hot with more than 21% gains this calendar year through mid-October. Many investors are thrilled with the state of their portfolio as a result, but keep in mind that past performance is no indicator of future returns.
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With a contentious election in November, continued conflict in the Middle East and Russia, and a general uncertainty around consumer confidence, it’s hard to predict what’s next for stocks. So if you’re starting to wonder when the other shoe will drop and looking for a more defensive posture, consumer staples ETFs could be a great option.
Consumer staples stocks are recession-proof and reliable, cashing in on regular sales of foodstuffs and household products. And the following seven ETFs are the best consumer staples ETFs to consider now if you’re interested in taking a more defensive approach across the end of the year and into 2025:
| ETFs | Expense Ratio | Forward Dividend Yield |
| Consumer Staples Select Sector SPDR Fund (ticker: XLP) | 0.09% | 2.5% |
| Vanguard Consumer Staples ETF (VDC) | 0.10% | 2.5% |
| iShares U.S. Consumer Staples ETF (IYK) | 0.40% | 2.5% |
| Fidelity MSCI Consumer Staples Index ETF (FSTA) | 0.084% | 2.4% |
| iShares Global Consumer Staples ETF (KXI) | 0.41% | 2.8% |
| First Trust Consumer Staples AlphaDEX Fund (FXG) | 0.63% | 1.6% |
| Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) | 0.40% | 2.8% |
Consumer Staples Select Sector SPDR Fund (XLP)
Assets under management: $12.7 billion Expense ratio: 0.09%, or $9 annually on $10,000 invested Dividend yield: 2.5%
This dominant consumer staples ETF leads the exchange-traded funds in this sector by assets and by trading volume. That makes it the logical place for investors to look for one-stop exposure. But while the runaway leader in many ways, it’s not particularly sophisticated, as XLP is populated by every staples stock in the S&P 500 and nothing more. Considering consumer defensive stocks make up less than 6% of the entire S&P 500, that adds up to less than 40 total stocks at present in this ETF. You’ll get big-name firms like personal care giant Procter & Gamble Co. (PG) and warehouse retailer Costco Wholesale Corp. (COST), of course, but keep in mind the list is still fairly short.
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Vanguard Consumer Staples ETF (VDC)
Assets under management: $7.1 billion Expense ratio: 0.10% Dividend yield: 2.5%
VDC is another well-established consumer staples ETF, benchmarked instead to an MSCI index of the sector that holds a wider array of about 100 different components. The megacap consumer staples firms still dominate the portfolio, however, with about two-thirds of assets in the top 10 components alone, including familiar names like Coca-Cola Co. (KO) and Walmart Inc. (WMT). Still, it’s hard to argue that the most dominant staples stocks are the most stable, so this is another top exchange-traded fund in the sector to consider.
iShares US Consumer Staples ETF (IYK)
Assets under management: $1.3 billion Expense ratio: 0.40% Dividend yield: 2.5%
This iShares product is similar in many ways to the prior two options. Namely, it has around 60 positions, and is dominated by big names like P&G, Walmart and Coke. What it does offer, however, is a significantly higher expense ratio than the other funds. That said, iShares is one of the most dominant providers out there and some brokers offer incentives to trade this family of funds vs. the alternatives, so it may still be worth a look in select portfolios.
Fidelity MSCI Consumer Staples Index ETF (FSTA)
Assets under management: $1.2 billion Expense ratio: 0.084% Dividend yield: 2.4%
Rounding out the list of billion-dollar consumer staples ETFs, this Fidelity product is the most affordable fund in the consumer staples sector by a hair. The formula is familiar, with 100 or so portfolio holdings that feature the biggest U.S.-listed brands out there. As a rule, any ETF with assets of $1 billion or more is incredibly well established and stable, so the cost-effective nature of this fund may give it an edge even if the other fund managers are typically leaders in their categories when it comes to low-cost index funds.
iShares Global Consumer Staples ETF (KXI)
Assets under management: $740 million Expense ratio: 0.41% Dividend yield: 2.8%
While it doesn’t quite top the $1 billion mark, KXI is the leader in the international category of the consumer staples sector. This ETF offers a portfolio that is not limited to domestic corporations and also includes familiar global brands like Switzerland-based consumer giant Nestle SA (OTC: NSRGY) and the U.K.’s Unilever PLC (UL). These are massive consumer staples stocks that are common in American grocery carts, even if the firms are headquartered overseas, so don’t fear you’re getting no-name stocks. Furthermore, with about 60% of assets in U.S. stocks and 6 of the 10 leading positions represented by domestic leaders, you’re still getting exposure to picks that other consumer staples ETFs offer as well as a bit of geographic diversification.
First Trust Consumer Staples AlphaDEX Fund (FXG)
Assets under management: $410 million Expense ratio: 0.63% Dividend yield: 1.6%
FXG is smaller than the other funds, but is the best option out there for investors looking to take a less conventional and more active approach to consumer staples stocks. Namely, this First Trust offering is an “enhanced” index that doesn’t just take a simple listing of the biggest and most familiar companies in the sector. The 40 staples stocks that make the cut here are selected based on factors including price appreciation trends, growth metrics like revenue expansion, and value metrics like price-to-book ratio.
The fund is regularly reconstituted to focus on what the screening methodology identifies as the best opportunities. Right now, top positions include foodservice company drugstore giant CVS Health Inc. (CVS), grocery distributor Performance Food Group Co. (PFGC) and agriculture giant Bunge Global SA (BG). The dividend yield is admittedly much smaller than the other funds, but this active approach and varied list of holdings makes FXG an interesting option to consider.
Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS)
Assets under management: $350 million Expense ratio: 0.40% Dividend yield: 2.8%
The polar opposite of the prior fund, RSPS is unique not because it looks for specific opportunities in the staples sector but because it treats all holdings equally. This Invesco ETF takes an “equal weight” approach to the consumer staples stocks in the S&P 500, with each of the roughly 40 positions at between 2% and 3% weighting and regular rebalancing to keep them there. Sure, you will get the same holdings as some of the multi-billion-dollar index funds that led this list. But consider that XLP has more than 19% of its assets in two single holdings, Procter & Gamble and Costco. If you really like staples because of the low-risk appeal and income potential, this is the best-diversified option and the one with the biggest yield of the group.
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7 Best Consumer Staples ETFs originally appeared on usnews.com
Update 10/15/24: This story was previously published at an earlier date and has been updated with new information.
