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Tickers in this Article: XLP, PG, KO, WMT, KFT
"Sell in May" certainly worked this year. Problem is it's hard to say that the sellers have gone away. Three trading days into June, U.S. equity markets look like they are honoring seasonal trends and that could mean a tough summer ahead for growth stocks and high beta sectors such as energy, financials and materials. And if seasonal trends are to be honored again this year, then now is a good time to get acquainted with some ETFs tracking defensive, low-beta sectors. One of the best is also one of the largest, the Consumer Staples Select Sector SPDR (NYSE: XLP). Defensive is one way of describing XLP, but more to the point, the ETF has been solid over the past month.

In that time, XLP has managed to lose just 2.5% compared to a 7% loss for the Dow Jones Industrial Average and an almost 6% decline for the S&P 500. Keep in mind that "defensive" isn't a guarantee of a stock or ETF going up when the broader market falls. Defensive issues are, however, generally less bad in market settings such as the current one and over time defensive, low beta stocks offer superior returns compared to high beta growth names.

What makes XLP's performance against the Dow all the more impressive is the fact that of the ETF's 43 holdings, four are Dow stocks. Those stocks - Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), Wal-Mart (NYSE: WMT) and Kraft (NYSE: KFT) combine for about 38% of XLP's weight and all are top-10 holdings in the fund.

XLP's almost 9% allocation to Wal-Mart, the world's largest retailer, certainly helps. That stock was easily the best in the Dow in May, generating a double-digit return while the blue-chip index itself was plunging.

As for P&G, Coca-Cola and Kraft, all are down in the past month, but they've outperformed the Dow and they are the epitome of defensive dividend plays. For what its worth, Warren Buffett's Berkshire Hathaway (NYSE: BRK-B) owns equity stakes in all four of the XLP holdings mentioned here, so if you want to channel your inner Buffett, XLP is an ideal ETF with which to do that.

XLP's biggest issue at the moment is that it is an equity-based ETF and less bad just isn't enough to insulate this fund's holdings completely from broader market weakness. On a technical basis, XLP recently fell out of an upward channel. Trading at just over $33, next support is the 200-day moving average at $32. If XLP can stay above $33, it's worth a small position in the near-term, though income investors would be best served owning some of XLP's constituents individually.

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