XLP vs. FTXG: The Clash of Consumer Staple ETFs

Both the State Street Consumer Staples Select Sector SPDR ETF (XLP +0.34%) and First Trust Nasdaq Food & Beverage ETF (FTXG 0.04%) focus on some of the most popular companies we know today, but in different sectors. This comparison looks at cost, returns, risk, liquidity, and portfolio construction to help investors weigh their options.

Snapshot (cost & size)

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

FTXG has a 0.60% expense ratio, which is significantly higher than XLP’s 0.08%. In return, FXTG offers a slightly higher dividend yield.

Performance & risk comparison

What’s inside

Nearly a decade since its inception, FTXG tracks a smart beta index focused on U.S. food and beverage companies, with 31 companies in its holdings. Its largest positions are PepsiCo, Inc. (PEP 0.75%), Archer-Daniels-Midland Company (ADM +0.01%), and Mondelez International, Inc. (MDLZ +1.18%).

Launched all the way back in 1998, XLP remains a consumer defensive staple among ETFs. With 39 holdings and a 27-year track record, its assets under management (AUM) are significantly higher than FTXG’s. Its top holdings include **Walmart **(WMT +0.19%), **Costco **(COST +1.96%), and Procter + Gamble (PG 0.71%).

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

With a lower expense ratio, significantly higher one-year and five-year returns, and a higher dividend payout despite having a lower yield percentage, XLP has simply been established on the market for too long for other consumer staple ETFs like FTXG to compete with it in terms of performance. What may work in FTXG’s favor is that it’s still a relatively younger fund compared to others on the market, so there may be more room for scalability as it continues to structure its portfolio.

What’s interesting about these two funds is their different focuses within the consumer defensive sector. The top holdings in XLP’s portfolio are more retail stores, while FTXG’s weight tends to lean toward food and beverage products. It’s a very niche difference within a relatively broad sector, but it may matter to some.

Regardless of which fund investors choose, both can offer stability during market volatility. Consumer defensive assets are often used as a hedge against economic downturns, mainly because, regardless of the economic condition, consumers still need food, beverages, and other essential goods at all times.