Which Is the Better Consumer Staples ETF: Fidelity's FSTA or iShares' IYK?

The Fidelity MSCI Consumer Staples Index ETF (FSTA +0.70%) stands out for its lower costs, broader stock coverage, and stronger recent returns versus the iShares U.S. Consumer Staples ETF (IYK +0.74%), which leans more into healthcare and offers a slightly higher yield.

Both FSTA and IYK track the U.S. consumer staples sector, but their approaches differ in cost, diversification, and sector tilts. This comparison looks at how these two ETFs stack up on expenses, returns, risk, and what’s under the hood for investors seeking defensive exposure.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

FSTA looks more affordable with its 0.08% expense ratio versus IYK’s 0.38%, but investors trade off a slightly lower dividend yield at 2.0% compared to IYK’s 2.4%.

Performance & risk comparison

What’s inside

FSTA focuses almost exclusively on the consumer defensive sector (98%), with negligible exposure elsewhere, and holds 104 companies. Its largest positions, Walmart (WMT +0.61%), Costco (COST +0.26%), and Procter & Gamble (PG +0.10%), make up a significant portion of the portfolio. The fund’s 12.4-year track record and broad coverage may appeal to those seeking diversified staples exposure with minimal sector drift.

IYK takes a slightly different tack, blending 85% consumer defensive with 11% healthcare and 2% basic materials. Top holdings include Procter & Gamble (PG +0.10%), Coca-Cola (KO +1.24%), and Philip Morris (PM +0.77%), giving it a more concentrated feel with 54 stocks. There are no notable quirks for either ETF, and neither fund tracks a custom or ESG index.

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What this means for investors

Investing in the consumer staples sector is a good practice, giving your portfolio stability during periods of macroeconomic uncertainty, and a source of passive income thanks to attractive dividend yields. Two ETFs focused in this area to consider are the Fidelity MSCI Consumer Staples Index ETF (FSTA) and the iShares U.S. Consumer Staples ETF (IYK).

FSTA boasts a low expense ratio, and has performed better over the past year than IYK although its max drawdown is greater. The fund is heavily tilted towards the retail sector due to Walmart and Costco representing over a quarter of the holdings.

IYK offers a greater mix of industries, although it’s still representative of consumer staples. It provides a better dividend yield and lower max drawdown compared to FSTA, but it is far more expensive.

FSTA is a good choice for investors who want greater exposure to the retail industry, and is more cost conscious. IYK is ideal for those seeking broader diversification beyond consumer staples, and a better dividend yield.

Personally, I would lean towards FSTA because I think Walmart and Costco are great businesses, and the low expense ratio makes it affordable to hold onto the ETF for the long term.