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.
Additionally, sector ETFs offer convenient ways 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 14, placing it in bottom 13%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $15.89 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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.53%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 15.27% of total assets, followed by Coca-Cola Company ( KO Quick Quote KO - Free Report) and Pepsico Inc. ( PEP Quick Quote PEP - Free Report) .
The top 10 holdings account for about 69.79% of total assets under management.
Performance and Risk
So far this year, XLP has lost about -6.38%, and is up roughly 1.93% in the last one year (as of 09/19/2022). During this past 52-week period, the fund has traded between $68.80 and $80.57.
The ETF has a beta of 0.56 and standard deviation of 19.50% for the trailing three-year period, making it a medium risk choice in the space. With about 35 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. Instead, there are better ETFs in the space to consider.
IShares U.S. Consumer Staples ETF (
IYK Quick Quote IYK - Free Report) tracks Dow Jones U.S. Consumer Goods Index and the Vanguard Consumer Staples ETF ( VDC Quick Quote VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index. IShares U.S. Consumer Staples ETF has $1.55 billion in assets, Vanguard Consumer Staples ETF has $6.55 billion. IYK has an expense ratio of 0.41% and VDC charges 0.10%. Bottom Line
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