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ETF Specialist

A Defensive Consumer Staples ETF for an Uncertain Economic Environment

This consumer staples ETF has a heavy large-cap tilt, with 91% of assets invested in large-cap firms.

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Morningstar's Take
 Consumer Staples Select Sector SPDR (XLP) is the lowest-priced and most liquid exchange-traded fund for broad exposure to a basket of defensive, mega-cap consumer discretionary names. As investors become increasingly concerned about potentially chilly economic winds ahead that could affect more discretionary consumer spending, they might want to consider this ETF, which holds the 41 consumer staples firms that are contained in the S&P 500 Index.

Investors seeking explosive growth are better suited looking elsewhere, as this ETF is chock-full of mature businesses offering relatively stable returns and a clear tilt toward large-cap names. While investors shouldn't expect much higher than mid-single-digit top-line growth from these mature firms, XLP does offer a decent dividend yield.

Robert Goldsborough does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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