Designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market, the Consumer Staples Select Sector SPDR ETF (
XLP Quick Quote XLP - Free Report) is a passively managed exchange traded fund launched on 12/16/1998.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $13.94 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.12%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 Quick Quote PG - Free Report) accounts for about 15.80% of total assets, followed by Pepsico Inc. ( PEP Quick Quote PEP - Free Report) and Coca-Cola Company ( KO Quick Quote KO - Free Report) .
The top 10 holdings account for about 70.96% of total assets under management.
Performance and Risk
The ETF has lost about -0.49% and is up roughly 18.31% so far this year and in the past one year (as of 01/12/2022), respectively. XLP has traded between $63.30 and $77.62 during this last 52-week period.
The ETF has a beta of 0.66 and standard deviation of 18.33% 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.
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. However, there are better ETFs in the space to consider.
IShares Global Consumer Staples ETF (
KXI Quick Quote KXI - Free Report) tracks S&P Global 1200 Consumer Staples Sector Index and the Vanguard Consumer Staples ETF ( VDC Quick Quote VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index. IShares Global Consumer Staples ETF has $1.07 billion in assets, Vanguard Consumer Staples ETF has $6.53 billion. KXI has an expense ratio of 0.43% and VDC charges 0.10%. Bottom Line
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