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3 Consumer-Oriented ETFs That Defied Thursday's Bloodbath

Sanghamitra Saha
Updated
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These are no long/short, no multi-asset, no-alternative investing strategies. Instead these are simple consumer-oriented ETFs that held their head high in Thursday’s market bloodbath. The S&P 500 is now into the correction territory for the first time in two years, down more than 10% from its record reached in January (read: Low Beta ETFs to Buy as Bulls Play Hide & Seek).

The Dow Jones Industrial Average is on track for its worst weekly percentage drop since the crisis. The index lost over 1,000 points on Feb 8, marking the second-worst point decline in history. The 10-year Treasury yield is hovering around the four-year high and was closed at 2.85% on Feb 8. Concerns over trillion-dollar budget deficits, rising rates and inflationary pressures caused this massacre.

Top three ETFs like SPDR S&P 500 ETF SPY, SPDR Dow Jones Industrial Average ETF DIA and PowerShares QQQ ETF QQQ retreated about 3.7%, 4.1% and 4.2% on Feb 8.

Like always, alternative asset classes resisted the sell-offs with the likes of PowerShares Multi-Strategy Alternative ETF LALT (up 1.30%) and AGFiQ US Market Neutral Anti-Beta BTAL (up 0.75%) in the green.

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Not only this, uncorrected-to-market ETFs, plain and simple consumer-focused ETFs too battled the slaughter. In fact, one ETF has extensive exposure to the health care sector as well in the sense that it focuses on obesity-related diseases like diabetes, high blood pressure, cholesterol, heart disease, stroke & sleep apnea & companies focused on weight loss programs, weight loss supplements, or plus-size apparel.

We believe as risk-off sentiments flared-up in the market, investors sought safety in sectors like consumer staples and health care. Their non-cyclical nature offered a guard to investors’ portfolio.

Below we highlight those winners:

ETF Options

PowerShares S&P Small-Cap Consumer Staples ETF PSCC

The underlying index of the fund comprises common stocks of U.S. consumer staples companies that are principally engaged in the businesses of providing consumer goods & services that have non-cyclical characteristics, including tobacco, textiles, food and beverage & non-discretionary retail and this Index is a subset of the S&P SmallCap 600 Index.

Food products (55.85%), Food & Staples Retailing (13.12%) and Household Products (13.05%) are the three segments of the fund, which charges 29 bps in fees. The fund gained about 0.8% on Feb 8.

First Trust Nasdaq Food & Beverage ETF FTXG

The underlying index is a modified factor weighted index, designed to provide exposure to US companies within the food and beverage industry. The product charges 60 bps in fees. Food products account for about 64.7% of the fund followed by 25.4% in soft drinks and 6% in distillers and vintners. The fund advanced about 0.7% on Feb 8.            

Obesity ETF SLIM

The underlying index – the Solactive Obesity Index – tracks the performance of companies globally positioned to profit from servicing the obese, including biotechnology, pharmaceutical, health care & medical device companies focusing on obesity-related diseases (read: Strong Holiday Retail Sales: 3 ETF & Stock Picks).

Health Care (81.7%), Consumer Discretionary (9.81%) and Consumer Staples (8.6%) are the top three sectors of the fund. It was up 1.2% on Feb 8.

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SPDR-DJ IND AVG (DIA): ETF Research Reports
 
NASDAQ-100 SHRS (QQQ): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
QS-US MN AN-BET (BTAL): ETF Research Reports
 
PWRSH-SP SC C S (PSCC): ETF Research Reports
 
PWRSH-MS AP (LALT): ETF Research Reports
 
FT-NDQ FD&BVG (FTXG): ETF Research Reports
 
OBESITY ETF (SLIM): ETF Research Reports
 
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Zacks Investment Research
 
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