Consumer staples products include those that consumers are unwilling or unable to cut out of their budgets, regardless of their financial difficulties or the state of the economy. There have been many forces in recent months that have threatened consumers' financial health, most prominently the COVID-19 pandemic and its widespread economic effects. Even though the consumer staples sector is often seen as a stalwart in times of volatility, the sector as a whole has underperformed the broader market in the past year. Consumer staples stocks, as represented by the S&P 500 Consumer Staples Select Sector Index, have provided a 1-year trailing total return of 5.4% compared to 20.8% for the S&P 500 as of February 3, 2021.
- The consumer staples sector significantly underperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total returns are IYK, ECON, and PSL.
- The top holdings of these ETFs are Tesla Inc., Sponsored ADR Class A shares of Baidu Inc., and Chegg Inc., respectively.
Investors looking for broad exposure to the consumer staples sector might look to exchange-traded funds (ETFs) focused on this area. There are 11 funds that trade in the U.S, excluding inverse and leveraged funds and those with under $50 million in assets under management (AUM). The best consumer staples ETF, based on 1-year trailing returns, 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 February 3, 2021.
- 1-Year Trailing Total Return: 33.6%
- Expense Ratio: 0.43%
- Annual Dividend Yield: 1.41%
- 3-Month Average Daily Volume: 28,538
- Assets Under Management: $767.8 million
- Inception Date: June 12, 2000
- Issuer: iShares
IYK focuses exclusively on consumer goods companies, excluding those that provide consumer services. The fund follows a blended strategy and tracks the Dow Jones U.S. Consumer Goods Index. The 99 individual holdings in IYK's portfolio skew toward consumer staples, but there also are other sectors represented. The top holdings of IYK are Tesla Inc. (TSLA), the electric car maker; Procter & Gamble Co. (PG), the beauty, home care, and health care consumer goods company; and PepsiCo Inc. (PEP), the food and beverage company.
- 1-Year Trailing Total Return: 31.7%
- Expense Ratio: 0.59%
- Annual Dividend Yield: 0.60%
- 3-Month Average Daily Volume: 31,722
- Assets Under Management: $196.7 million
- Inception Date: September 14, 2010
- Issuer: Columbia Threadneedle Investments
A large-cap blended fund, ECON focuses on the consumer 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 Titans Index, a free-float market cap-weighted index of 60 stocks. The fund's largest positions are skewed toward the Chinese economy. Its top three holdings are Sponsored ADR Class A shares of Baidu Inc. (BIDU), the Chinese technology, internet, and artificial intelligence company; class B shares of Meituan (3690:HKG), the Chinese shopping platform for consumer goods and other products; and Tencent Holdings Ltd. (700:HKG), the internet technology holding company.
- 1-Year Trailing Total Return: 22.1%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.79%
- 3-Month Average Daily Volume: 5,362
- Assets Under Management: $108.6 million
- Inception Date: October 12, 2006
- Issuer: Invesco
PSL is a multi-cap growth fund is based on the Dorsey Wright Consumer Staples Technical Leaders Index. The Fund typically invests at least 90% of its total assets in the securities that comprise the index, which is composed of at least 30 securities.The fund holds 39 stocks, with about 40.5% of assets invested in the top 10 holdings. The top holdings of the fund are Chegg Inc. (CHGG), the educational technology company; Monster Beverage Corp. (MNST), the energy drink and beverage company; and Church & Dwight Co. Inc. (CHD), a maker of household products.
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