Consumer goods products are those that consumers are unwilling or unable to cut from their budget, regardless of their financial difficulties or the state of the economy. The category includes products such as 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 or bad economic times.
Stocks of consumer goods therefore tend to be relatively more stable and less unstable compared to other segments of the stock markets. Investors looking for broad exposure to the consumer staples sector might want to look exchange traded funds (ETFs) focused on this area.
- The consumer staples sector has outperformed the broader market over the past year.
- The consumer staples exchange-traded funds (ETFs) with the best annual total returns are FXG, FTXG and PBJ.
- The top holdings in these ETFs are Mckesson Corporation in the first fund, Kellogg Company in the second fund, and General Mills Inc. in the third fund.
There are 13 major U.S.-traded consumer ETFs, excluding inverse and leverage effect ETFs as well as funds with less than $50 million assets under management (AUM). The consumer staples sector, as measured by the S&P 500 Consumer Staples Sector Index, has outperformed the broader market with a total return of 7.0% over the past 12 months, compared to the S&P 500’s total return of -7.9% through August. 26, 2022.
The best-performing consumer staples ETF, based on performance over the past year, is the First Trust Consumer Staples AlphaDEX Fund (FXG). Below, we examine three of the best consumer staples ETFs. All numbers below are as of August 29, 2022.
- Performance in one year: 13.0%
- Cost ratio: 0.64%
- Annual Dividend yield: 1.37%
- Three-month average per day Volume: 169,848
- Assets under management: $669.1 million
- Start date: May 8, 2007
- Issuer: First Trust
FXG tracks the StrataQuant Consumer Staples Index. The index focuses on selecting specific stocks from the inside Russell 1000 Index based on price appreciation and growth factors in three, six and twelve month increments. Shares have equal weight in each quintile within the index. The mixed multi-cap fund consists primarily of stocks that fall into the consumer durables, retail and manufacturing sectors.
FXG’s three largest holdings are Mckesson Corporation (MCK), a healthcare company focused on the production of pharmaceutical drugs and medical devices; Performance Food Group Company (PFGC), a food distribution company that delivers products to places such as restaurants, healthcare facilities, and schools; and Darling Ingredients Inc. (GIFT), a company that develops and distributes ingredients for bionutritional supplements.
- Performance in one year: 12.6%
- Expense ratio: 0.60%
- Annual dividend yield: 1.36%
- Three-month average daily volume: 120,117
- Assets under management: $907.8 million
- Start date: September 20, 2016
- Issuer: First Trust
FTXG tracks the Nasdaq US Smart Food & Beverage Index. It is a modified factor-weighted index composed of stocks that meet criteria based on factors such as volatility, growth and value. FTXG is a mixed multi-cap fund. More than 75% of the fund consists of stocks from the consumer durables sector. Companies that specialize in the distribution of consumer goods and agriculture are included in this fund.
FTXG’s top three holdings are Kellogg Company (TO), a company that sells and produces snacks; Archer-Daniels-Midland Co. (ADM), a multinational food and commodity processing company; and class B shares of Molson Coors Beverage Company (TAP), which focuses on the sale, production and distribution of alcoholic products such as beer and other malt beverages.
- Performance in one year: 11.2%
- Expense ratio: 0.63%
- Annual dividend yield: 1.04%
- Three-month average daily volume: 85,248
- Assets under management: $330.2 million
- Start date: June 23, 2005
- Issuer: Invesco
PBJ seeks to track the Dynamic Food & Beverage Intellidex Index, an index of 30 US-based food and beverage companies selected for price dynamics, earnings dynamics, quality, management and value. The Multicap ETF uses a blended approach, investing in a combination grow and value shares. In addition to companies engaged in the production and distribution of food and beverage products, the fund also includes companies engaged in agricultural products and food technology stocks.
PBJ’s top three holdings include General Mills Inc. (GIS), the world market leader in the production of branded retail food products; Keurig Dr Pepper Inc. (KDP), an internationally operating company that produces branded beverages; and Sysco Corporation (SYY), a catering company that distributes food products to restaurants and other establishments through its subsidiaries.
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