Investors tilt focus to Consumer Staples ETFs

Markets uncertainties favor Consumer Staples ETFs

Investors have added over $3.3 billion into Consumer Staples ETFs this year as they seek safe harbor amid rising economic uncertainties and boiling geopolitical tensions between Russia and the West. In this global inflationary environment, consumer staples can usually weather the storm since the demand for staples are inelastic and that gives these companies higher pricing power as they are able to increase their prices with inflation better than other industries. They also exhibit less market sensitivity and lower overall volatility.

Investing in America-domiciled Consumer Staples ETFs

Among the largest Consumer Staples ETFs available for investors in America are the Consumer Staples Select Sector SPDR Fund (XLP), Vanguard Consumer Staples ETF (VDC), iShares Global Consumer Staples ETF (KXI), Fidelity MSCI Consumer Staples Index ETF (FSTA), and iShares U.S. Consumer Staples ETF (IYK).

XLP alone received $2.25 billion this year. The fund tracks the Consumer Staples Select Sector Index and provides exposure to S&P 500 consumer staples companies. In terms of industry exposure, Beverages has the highest weight (24.68%), followed by Household Products (24.24%), Food & Staples Retailing (19.3%), Food Products (18.16%), Tobacco (10.15%), and Personal Products (3.48%). The fund’s leading names are Procter & Gamble (16.56%), Coca-Cola Company (10.4%), PepsiCo Inc. (9.92%), Costco Wholesale (9.69%), and Philip Morris International (5.43%).

The fund has an expense ratio of 0.1% and trades primarily on NYSE ARCA Exchange. Despite the notable inflows this year, XLP’s price slightly dipped by -1.5%.