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Should You Invest in the Consumer Staples Select Sector SPDR ETF (XLP)?
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The Consumer Staples Select Sector SPDR ETF (XLP - Free Report) was launched on 12/16/1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Staples - Broad segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $15.09 billion, making it the largest ETF attempting to match the performance of the Consumer Staples - Broad segment of the equity market. XLP seeks to match the performance of the Consumer Staples Select Sector Index before fees and expenses.
The Consumer Staples Select Sector Index seeks to provide an effective representation of the consumer staples sector of the S&P 500 Index.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.49%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector--about 100% of the portfolio.
Looking at individual holdings, Procter & Gamble Company (PG - Free Report) accounts for about 16.03% of total assets, followed by Coca-Cola Company (KO - Free Report) and Costco Wholesale Corporation (COST - Free Report) .
The top 10 holdings account for about 71.56% of total assets under management.
Performance and Risk
So far this year, XLP has lost about -5.22%, and it's up approximately 4.21% in the last one year (as of 07/19/2022). During this past 52-week period, the fund has traded between $68.80 and $80.57.
The ETF has a beta of 0.57 and standard deviation of 19.49% for the trailing three-year period, making it a medium risk choice in the space. With about 34 holdings, it has more concentrated exposure than peers.
Alternatives
Consumer Staples Select Sector SPDR ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. XLP, then, is not a great choice for investors seeking exposure to the Consumer Staples ETFs segment of the market. Instead, there are better ETFs in the space to consider.
IShares U.S. Consumer Staples ETF (IYK - Free Report) tracks Dow Jones U.S. Consumer Goods Index and the Vanguard Consumer Staples ETF (VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index. IShares U.S. Consumer Staples ETF has $1.32 billion in assets, Vanguard Consumer Staples ETF has $6.35 billion. IYK has an expense ratio of 0.41% and VDC charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the Consumer Staples Select Sector SPDR ETF (XLP)?
The Consumer Staples Select Sector SPDR ETF (XLP - Free Report) was launched on 12/16/1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Staples - Broad segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $15.09 billion, making it the largest ETF attempting to match the performance of the Consumer Staples - Broad segment of the equity market. XLP seeks to match the performance of the Consumer Staples Select Sector Index before fees and expenses.
The Consumer Staples Select Sector Index seeks to provide an effective representation of the consumer staples sector of the S&P 500 Index.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.49%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector--about 100% of the portfolio.
Looking at individual holdings, Procter & Gamble Company (PG - Free Report) accounts for about 16.03% of total assets, followed by Coca-Cola Company (KO - Free Report) and Costco Wholesale Corporation (COST - Free Report) .
The top 10 holdings account for about 71.56% of total assets under management.
Performance and Risk
So far this year, XLP has lost about -5.22%, and it's up approximately 4.21% in the last one year (as of 07/19/2022). During this past 52-week period, the fund has traded between $68.80 and $80.57.
The ETF has a beta of 0.57 and standard deviation of 19.49% for the trailing three-year period, making it a medium risk choice in the space. With about 34 holdings, it has more concentrated exposure than peers.
Alternatives
Consumer Staples Select Sector SPDR ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. XLP, then, is not a great choice for investors seeking exposure to the Consumer Staples ETFs segment of the market. Instead, there are better ETFs in the space to consider.
IShares U.S. Consumer Staples ETF (IYK - Free Report) tracks Dow Jones U.S. Consumer Goods Index and the Vanguard Consumer Staples ETF (VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index. IShares U.S. Consumer Staples ETF has $1.32 billion in assets, Vanguard Consumer Staples ETF has $6.35 billion. IYK has an expense ratio of 0.41% and VDC charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.