Consumer staples products are those that consumers are unwilling or unable to cut out of their budgets, regardless of their financial difficulties or the state of the economy. The category includes products like food and beverages, household goods, and hygiene products as well as alcohol and tobacco. These types of goods are considered basic necessities that consumers will buy in good economic times and in bad ones. Thus, consumer staples stocks tend to be relatively more stable and less volatile compared to other segments of the equity markets. Investors looking for broad exposure to the consumer staples sector might look to exchange-traded funds (ETFs) focused on this area.
Key Takeaways
- The consumer staples sector significantly underperformed the broader market over the past year.
- The ETFs with the best one-year trailing total return are IYK, IEV, and PBJ.
- The top holdings of these ETFs are Tesla Inc., Nestle S.A., and Monster Beverage Corp., respectively.
There are 11 consumer staples ETFs that trade in the U.S, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). The consumer staples sector, as measured by the S&P 500 Consumer Staples Sector Index, has underperformed the broader market over the past 12 months, with a total return of 18.2% compared to the S&P 500’s total return of 35.2%, as of Aug. 2, 2021. The best-performing consumer staples ETF for Q4 2021, based on performance over the past year, is the iShares U.S. Consumer Goods ETF (IYK). We examine the three best consumer staples ETFs below. All numbers are as of Aug. 2, 2021.
- Performance over One-Year: 36.9%
- Expense Ratio: 0.43%
- Annual Dividend Yield: 1.31%
- Three-Month Average Daily Volume: 13,834
- Assets Under Management: $696.6 million
- Inception Date: June 12, 2000
- Issuer: Blackrock Financial Management
IYK currently tracks the Dow Jones U.S. Consumer Goods Index, which measures the performance of the consumer goods sector of the U.S. equity market. However, it will seek to track the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index starting on or around Sept. 20, 2021. It will also change its name to “iShares U.S. Consumer Staples ETF.”
IYK provides exposure to U.S. companies that offer a broad range of consumer goods, such as food, automobiles, and household items. The fund’s 99 holdings are primarily large-cap stocks. Companies that make products such as food, beverage, and tobacco receive the largest allocation, followed by companies that make automobiles and related components. This ETF follows a blended strategy, investing in a mix of value and growth stocks. Its top three holdings include Tesla Inc. (TSLA), an electric vehicle and clean energy company; Procter & Gamble Co. (PG), a provider of consumer packaged goods; and Coca-Cola Co. (KO), a beverage company that offers soft drinks, juices, enhanced waters, and more.
- Performance over One-Year: 33.3%
- Expense Ratio: 0.59%
- Annual Dividend Yield: 2.26%
- Three-Month Average Daily Volume: 253,558
- Assets Under Management: $2.0 billion
- Inception Date: July 25, 2000
- Issuer: Blackrock Financial Management
IEV tracks the S&P Europe 350 Index, which measures the performance of European equities. The ETF provides international diversification by offering broad exposure to companies operating in a range of European countries, including the U.K., France, Switzerland, Germany, the Netherlands, and others. The large-cap fund is comprised of 364 holdings. Financials receive the highest weighting in the fund, followed by industrials, and healthcare.
IEV follows a blended strategy, investing in both growth and value stocks. The fund’s top three holdings include Nestle S.A. (NESN:SWX), a Switzerland-based multinational food and beverage company; ASML Holding NV (ASML:AMS), a Netherlands-based manufacturer of semiconductor equipment; and Roche Holding AG (ROG:SWX), a Switzerland-based multinational healthcare company offering pharmaceuticals and diagnostics.
- Performance over One-Year: 25.7%
- Expense Ratio: 0.63%
- Annual Dividend Yield: 1.11%
- Three-Month Average Daily Volume: 22,225
- Assets Under Management: $94.3 million
- Inception Date: June 23, 2005
- Issuer: Invesco
PBJ tracks the Dynamic Food & Beverage Intellidex Index, which is comprised of U.S. food and beverage stocks and follows an evaluation methodology for stock inclusion based on factors such as fundamental growth, valuation, investment timeliness, and risk factors. The ETF provides exposure to companies mostly engaged in the manufacture, sale, or distribution of food and beverage products, agricultural products, and products related to the development of new food technologies. It is comprised of 32 holdings across the market-cap spectrum and follows a blended strategy of investing in a mix of both value and growth stocks.
The fund’s top three holdings include Monster Beverage Corp. (MNST), a beverage company that manufactures energy drinks; class A shares of Mondelez International Inc. (MDLZ), a multinational snack food and beverage company; and Keurig Dr Pepper Inc. (KDP), a producer of a variety of consumer foods and beverages, including Dr. Pepper, Green Mountain Coffee, Krispy Kreme doughnuts, and Panera Bread.
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