The Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS) is equal-weighted, so each company in the fund gets equal exposure. Dividend yield: 1.6% Constellation Brands (STZ, … The case for the Consumer Staples Select Sector Fund (NYSEARCA:XLP) in 2020 can be summarized simply: Consumers will continue spending this year, but they will begin to be more selective in which goods and services they purchase. Although the odds of a recession occurring in the New Year are low, investors are wise to bet that some of the best exchange-traded funds for 2020 will be the funds that can perform well in a slowing economy. We'll assume you're ok with this, but you can opt-out if you wish. Absent any surprises, the economic environment will remain favorable for stocks in 2020 but investors’ collective appetite for risk may begin to decline as signs of economic sluggishness continue. • Loss of appetite for buy-the-dip stocks: If you’re watching the market closely, or if you hold a diverse range of stocks, you’ve noticed that the biggest gainers on the bear market upswings are the riskier stocks, such as tech stocks and small-cap stocks. quotes delayed at least 15 minutes, all others at least 20 minutes. This website uses cookies to improve your experience while you navigate through the website. This website uses cookies to improve your experience. Kent Thune’s choice for the contest is the Consumer Staples Select Sector Fund (NYSEARCA:XLP). The Consumer Staples sector tracks companies whose primary businesses are based around food and beverages, hygiene products, household items, etc. This article is a part of InvestorPlace.com’s Best ETFs for 2020 contest. Under no circumstances does this information represent a recommendation to buy or sell securities. These are just a few of the signs already present or beginning to emerge now. When thinking about how to invest in 2020, a smart way to frame the ETF selection process is to think about how to invest in a moderately healthy economy that is beginning to show signs of weakness but no strong signal of recession. This broader diversification comes at a cost; this ETF has an expense ratio of 0.46%. All rights reserved. The Consumer Staples Select Sector SPDR Fund (XLP) is the most popular ETF for this market segment, with over $14 billion in assets. The fund seeks to track the MSCI USA IMI Consumer Staples Index. The fund seeks to track the S&P Consumer Staples Select Sector Index, composed of Consumer Staples stocks in the S&P 500. Here are more recent signs of a late-phase environment or slowing economy: In summary, the U.S. economy is moderately healthy but the expansion is clearly showing signs of a slowdown. Disclosure:  Some of the links on this page are referral links. You also have the option to opt-out of these cookies. The above 3 ETFs only target Consumer Staples stocks in the United States. Investment products discussed (ETFs, mutual funds, etc.) Analytical and entrepreneurial-minded data nerd, usability enthusiast, Boglehead, and Oxford comma advocate. Here are the best Consumer Defensive funds. Kent Thune’s choice for the contest is the Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP). The sector typically performs well during market downturns. Interested in more Lazy Portfolios? All rights reserved. Beginners Start Here – 9 Steps to Start Building Wealth, What Is the Stock Market? The fund seeks to track the S&P Global 1200 Consumer Staples Sector Capped Index. The Fidelity MSCI Consumer Staples Index ETF (FSTA) is somewhat in between the above two in terms of exposure. Best ETFs for 2020: Consumer Staples SPDR Fund Offers a Perfect Defense, InvestorPlace.com’s Best ETFs for 2020 contest, 6 Big-Cap Energy Stocks to Avoid Heading Into 2021, Louis Navellier and the InvestorPlace Research Staff, Earnings Show Why Nvidia Stock Remains a Must-Own, Matt McCall and the InvestorPlace Research Staff, What Did the Stock Market Do Today? This ETF is the cheapest on the list with an expense ratio of 0.08%. When stock prices are falling, XLP will typically fall less than the broader market indices, and much less than riskier areas of the market. With over 90 holdings, VDC provides broader diversification and comparatively more mid- and small-cap exposure than XLP above. The fund seeks to track the S&P Consumer Staples Select Sector Index, composed of Consumer Staples stocks in the S&P 500. How To Beat the Market Using Leverage and Index Investing, How To Buy Bonds Online: The Ultimate Guide, The 5 Best High Yield Bond Funds for Income. 2020 InvestorPlace Media, LLC. I have no formal financial education. As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. When I selected the Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) for the best ETFs 2020 contest, there was no indication the market would see a Black Swan event, followed by a historic bear market, both before the end of the first quarter. Consumer Staples are an attractive sector for those seeking steady growth, healthy dividends, and low volatility. # 1. in Consumer Defensive. Think Procter & Gamble, Coca-Cola, General Mills, Johnson & Johnson, etc. Read my lengthier disclaimer here. This category only includes cookies that ensures basic functionalities and security features of the website. When the reality of a longer-than-expected recession replaces the v-shape fantasy, solid defensive ETFs like XLP will look more attractive. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. The chart below presents three different ETFs in the industry, Consumer Staples Select SPDR Fund (NYSEMKT:XLP), Vanguard Consumer Staples ETF (NYSEMKT:VDC) and iShares U.S. Consumer … Copyright © 2020 InvestorPlace Media, LLC. However, he holds XLP in some client accounts. Below are the 5 best Consumer Staples ETFs. are for illustrative purposes only. This is a list of all US-traded ETFs that are currently included in the Consumer Staples … Here are a few of the greatest perks: • Downside protection: When stock prices are falling, the prices for consumer staples stocks are generally falling less. 1125 N. Charles St, Baltimore, MD 21201. All rights reserved. In a slowing economy, the smart money will begin to move into high-quality, dividend-paying, large-cap stocks, such as XLP top holdings Proctor & Gamble Company (NYSE:PG), Coca-Cola Co (NYSE:KO) and Altria Group (NYSE:MO). Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. When information and data are short or absent, an investor must use their intuition, which comes from a combination of experience and educated guesses. When beginning the search for the best ETFs to buy in 2020, a smart place to begin is with a review of where the economy stands in relation to the business cycle. Market value: $36.1 billion. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. It is mandatory to procure user consent prior to running these cookies on your website. Read more here. Necessary cookies are absolutely essential for the website to function properly. Consequently, revenues for these companies are relatively steady even during market turmoil. This is not financial advice, investing advice, or tax advice. – things that people need on an everyday basis. As a result, this sector is typically more insulated than others during market downturns. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. But keep in mind that not all dividend stocks are created equal. 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