Consumer staples products include those that consumers are unwilling or unable to cut out of their budgets, in spite of financial difficulties or economic turmoil. There have been many factors in play in recent months which have threatened financial situations across the country, including the COVID-19 pandemic and periods of heightened tension involving trade between the U.S. and China. Yet despite these challenges, the consumer staples sector is often seen as a stalwart even in times of volatility, given that it is comprised of companies offering goods and services seen as essential. For this reason, the consumer staples sector as a whole has performed decently in the past year, somewhat underperforming the broader market. Consumer staples stocks, as represented by the S&P 500 Consumer Staples Sector, have provided 1-year trailing total returns of 8.7% as compared with 14.3% for the S&P 500 as of September 10.
- The consumer staples sector underperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are IYK, ECON, and XLP.
- The top holdings of these ETFs are Procter & Gamble Co., Meituan Dianping, and Procter & Gamble, respectively.
Investors looking for broad exposure to the consumer staples sector might look to exchange-traded funds (ETFs) focused on this area. There are a dozen such funds, excluding inverse and leveraged funds as well as those with under $50 million in assets under management (AUM). The best consumer staples ETF for Q4 2020 is the iShares U.S. Consumer Goods ETF (IYK). Below, we look at the top 3 consumer staples ETFs based on 1-year trailing total returns. All data except for benchmark performance figures above are as of September 13, 2020.
- 1-Year Trailing Total Return: 18.8%
- Expense Ratio: 0.42%
- Annual Dividend Yield: 1.76%
- 3-Month Average Daily Volume: 43,657
- Assets Under Management: $612.3 million
- Inception Date: June 12, 2000
- Issuer: iShares
IYK focuses exclusively on consumer goods companies, excluding those which provide consumer services. The fund follows a blended strategy and tracks the Dow Jones U.S. Consumer Goods Index. The more than 100 individual holdings in IYK’s portfolio skew toward consumer staples, but there are also other sectors represented. The top holdings of IYK are Procter & Gamble Co. (PG), the beauty, home care, and health care consumer goods company; Tesla Inc. (TSLA), the electric car maker; and Coca-Cola Co. (KO), the beverage company.
- 1-Year Trailing Total Return: 13.0%
- Expense Ratio: 0.59%
- Annual Dividend Yield: 1.58%
- 3-Month Average Daily Volume: 51,223
- Assets Under Management: $163.4 million
- Inception Date: September 14, 2010
- Issuer: Columbia Threadneedle Investments
A large-cap blended fund, ECON focuses on the consumers sector in emerging markets. The fund is a pure play on emerging markets and does not include intermediary countries such as South Korea. ECON tracks the Dow Jones Emerging Market Consumer Index, a free-float market cap-weighted index of 30 stocks. The fund’s largest positions are skewed toward the Chinese economy, with its top three holdings being Meituan Dianping (3690), the Chinese shopping platform for consumer goods and other products; JD.Com Inc. (JD), the Chinese retailer and e-commerce giant; and Alibaba Group Holding Ltd. (BABA), the Chinese multinational technology, e-commerce, and internet company.
- 1-Year Trailing Total Return: 8.3%
- Expense Ratio: 0.13%
- Annual Dividend Yield: 2.52%
- 3-Month Average Daily Volume: 9,430,803
- Assets Under Management: $14.2 billion
- Inception Date: December 16, 1998
- Issuer: State Street SPDR
Tracking the Consumer Staples Select Sector Index, XLP targets companies in the food and beverage, personal care, household products, and tobacco industries. This fund is the most liquid and the largest by AUM on our list. It holds about 34 stocks, with the top 10 holdings receiving close to three quarters of invested assets. The top holdings of XLP include Procter & Gamble; Coca-Cola; and Walmart Inc. (WMT), the retail corporation.