The health care and consumer staples arenas, and the exchange traded funds (ETFs) that track them, are two sectors that traditionally weather rocky market storms. Companies within these sectors tend to maintain stable revenue and earnings. They also typically have plenty of cash available to reinvest into the business, pay dividends or buy back shares, reports Jonathan Burton for MarketWatch.
People will always get sick, and people need to eat, which means these stocks and ETFs aren’t highly correlated to the job market or economic trends. Although their numbers aren’t traditionally exciting as you can see below, the health care and consumer staples companies usually are solid and consistent performers with attractive valuations and growth earnings. Some of these ETFs might make for a defense strategy in a portfolio, but it is still important to watch and make sure they don’t fall below their individual trend line.
Some broad-based health care ETFs and their performance year-to-date:
- Health Care Select Sector SPDR (XLV) – up 2%
- iShares Dow Jones U.S. Health Care (IYH) – up 2.5%
- Vanguard Health Care ETF (VHT) – up 2.5%
- iShares S&P Global Health Care (IXJ) – up 0.3%
- WisdomTree International Health Care (DBR) – up 0.8%
Some consumer-focused ETFs and their performance year-to-date:
- Consumer Staples Select SPDR (XLP) – up 3.3%
- Vanguard Consumer Staples (VDC) – up 3.8%
- iShares Dow Jones Consumer Goods (IYK) – up 2.8%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.