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Looking for broad exposure to the Consumer Staples - Broad segment of the equity market? You should consider the Consumer Staples Select Sector SPDR ETF (XLP), a passively managed exchange traded fund launched on 12/16/1998.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many 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 15, placing it in bottom 6%.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $16.49 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.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 2.24%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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) accounts for about 16.03% of total assets, followed by Coca-Cola Company (KO) and Costco Wholesale Corporation (COST).
The top 10 holdings account for about 71.56% of total assets under management.
Performance and Risk
The ETF has added roughly 0.69% so far this year and was up about 11.45% in the last one year (as of 05/17/2022). In that past 52-week period, it has traded between $68.80 and $80.57.
The ETF has a beta of 0.59 and standard deviation of 18.86% 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. Instead, there are better ETFs in the space to consider.
IShares U.S. Consumer Staples ETF (IYK) tracks Dow Jones U.S. Consumer Goods Index and the Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index. IShares U.S. Consumer Staples ETF has $1.24 billion in assets, Vanguard Consumer Staples ETF has $6.96 billion. IYK has an expense ratio of 0.41% and VDC charges 0.10%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
CocaCola Company The (KO) : Free Stock Analysis Report
Procter & Gamble Company The (PG) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports
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