“This exchange traded fund, which offers exposure to mega-cap household names with which consumers continue to transact business regardless of the economic climate, could also be viewed as a defensive portfolio tilt,” says Morningstar analyst Robert Goldsborough in a profile of the fund. “Investors looking for explosive growth are better suited looking elsewhere, however, as this portfolio is chock-full of mature businesses offering relatively stable returns.”
Brenna Hardman at ABN Amro Clearing on CBOE TV said Tuesday’s “massive trade” in XLP call options has tripled open interest in the product.
The consumer staples ETF has outperformed since the general market peaked on Sept. 14, says Investors Intelligence technical analyst Tarquin Coe. This is an indication of “the ongoing defensive rotation,” he said.
Meanwhile, momentum suggests the fund isn’t overbought which “should permit a break to new highs even if the general market remains stagnant,” Coe added.
Consumer Staples Select Sector SPDR
