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, including the COVID-19 pandemic, the economic slowdown, and periods of heightened tension involving trade between the U.S. and China. 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 Consumer Staples Select Sector SPDR (XLP) have provided a 1-year trailing total return of 13.2% compared to 18.1% for the S&P 500 as of November 13.
- The consumer staples sector 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 Procter & Gamble Co., Meituan Dianping, and Estée Lauder Companies 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 November 16, 2020.
- 1-Year Trailing Total Return: 24.7%
- Expense Ratio: 0.42%
- Annual Dividend Yield: 1.73%
- 3-Month Average Daily Volume: 45,200
- Assets Under Management: $657.5 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 more than 100 individual holdings in IYK's portfolio skew toward consumer staples, but there also are 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: 23.0%
- Expense Ratio: 0.59%
- Annual Dividend Yield: 1.46%
- 3-Month Average Daily Volume: 25,447
- Assets Under Management: $175.6 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 Index, a free-float market cap-weighted index of 30 stocks. The fund's largest positions are skewed toward the Chinese economy. Its top three holdings are Meituan Dianping (3690:HKG) class B shares, the Chinese shopping platform for consumer goods and other products; JD.Com Inc. (JD), the Chinese retailer and e-commerce giant; and Tencent Holdings Ltd. (700:HKG), the internet technology holding company.
- 1-Year Trailing Total Return: 19.6%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.79%
- 3-Month Average Daily Volume: 5,765
- Assets Under Management: $103.8 million
- Inception Date: October 12, 2006
- Issuer: Invesco
PSL is a multi-cap growth fund that tracks the Dynamic Consumer Staples Sector Intellidex Index, which focuses the U.S. consumer staples sector using a quant-based methodology. PSL carries a slightly higher expense ratio than some of the other ETFs in this category. The fund holds 37 stocks, with about 36.8% of assets invested in the top 10 holdings. The top holdings of the fund are Estée Lauder Companies Inc. (EL), the beauty product, skin care, and makeup company; Tupperware Brands Corp. (TUP), the kitchen and household product maker; and Freshpet Inc. (FRPT), the maker of pet food and treats.