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Tickers in this Article: XLP, FXG, PG, KO, PM, WMT, KFT, GIS, MNST
There's an ample number of choices available to investors when it comes to consumer staples ETFs, but one fund commands the bulk of the attention among this low-beta, blue chip sector: The Consumer Staples Select Sector SPDR (NYSE: XLP). Born in 1998, the Consumer Staples Select Sector SPDR today sports an expense ratio of 0.18% and assets under management of almost $5.4 billion, making the ETF the cheapest, largest and oldest tracking the consumer staples stocks. As is often the case with sector funds, assets, fees and age are rarely indicators of a fund's potential to generate acceptable returns for investors. Regarding age and AUM, those are merely superficial statistics that investors can derive some comfort from, but those numbers are far from guarantees of alpha.

To be sure, there's no knocking XLP. The fund is up 5.6% year-to-date, 13% in the past year and is sporting a strong chart that shows a pronounced uptrend. XLP also closed within a dime of its 52-week high on Thursday.

Still, it might be worth looking at some of XLP's competition before jumping into the big kahuna of staples ETFs. A noteworthy rival to XLP is the First Trust Consumer Staples AlphaDEX Fund (NYSE: FXG), which has slightly outperformed its larger rival year-to-date. With $444.2 million in AUM, FXG isn't small by the standards of ETF, it's merely small by the standard set by XLP. That should not be a deterrent to evaluating FXG.

In fact, FXG has more of what an investor should really want in an ETF: Diversity. Put another way, four stocks - Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), Philip Morris (NYSE: PM) and Wal-Mart (NYSE: WMT) - comprise over 44% of XLP's weight. One would need to add up all of FXG's top-10 holdings to exceed 45%.

Another compelling reason to consider FXG beyond diversity is what companies make up that diversity. Yes, Coca-Cola, Procter & Gamble, Philip Morris, Kraft (NYSE: KFT) and General Mills (NYSE: GIS) are found among FXG's lineup, but they, along with some other venerable staples, reside at the back end of FXG's constituency. They're not the tails wagging this dog.

Rather, FXG offers more of a growth feel than XLP, a fact highlighted by FXG's top holding Monster Beverage (NASDAQ: MNST). Not only is Monster a growth stock, it's a takeover target. Overall, FXG is home to several legitimate growth stocks. XLP isn't really home to any. It can also be said that close to 10 of FXG's constituents could be takeover targets. Again, that number is far larger than what you'll find with XLP.

At the end of the day, both ETFs are fine options for investors looking for staples exposure. XLP would be the one you recommend to your grandparents. Younger risk-takers would probably prefer FXG.

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