Defensive sector ETFs such as consumer staples funds have outperformed the S&P 500 since April in a market dominated by European debt fears and the possibility of a Greek exit from the euro. Consumer staples ETFs also offer decent yields as investors ride out a volatile and risky market.

Consumer Staples Select Sector SPDR (NYSEArca: XLP) gained 2.6% for the three months ended June 7, compared with a 2.2% loss for iShares S&P 500 (NYSEArca: IVV).

The noncyclical sector is often favored in tough times for the economy because the companies’ products are necessities.

“One of the best sectors for maintaining exposure to the equity market with below average risk is the consumer staples,” writes Matt McCall at Investopedia. [Sector ETFs for Defense: Utilities and Consumer Staples]

“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,” writes Morningstar analyst Robert Goldsborough in an article posted Friday. “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.”

XLP has a dividend yield of 2.66%, according to manager State Street Global Advisors. [Consumer Staples: Defense and Yield]

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