Despite some pullbacks at the hands of strong dollar/rising interest rate fears, consumer staples ETFs remain popular with investors. The dominant names in the group, the Consumer Staples Select Sector SPDR (NYSEArca: XLP) and the Vanguard Consumer Staples ETF (NYSEArca: VDC), are down an average of 2% in the past month.
That does not mean investors are running for the exits. Actually, the opposite is true. In the past month, XLP has raked in $450.7 million in assets under management, according to Index Universe data. With above-average dividend yields and low risk exposure, defensive consumer staples ETFs have been prized investors and that does not appear to be changing despite evidence of a move out of utilities ETFs into higher-beta sector funds. [Staples ETFs for Yield]
Investors can grab the best of both worlds – defensive staples and participation in the cyclical rotation – with a more adventurous approach to staples ETFs. The iShares S&P Global Consumer Staples Sector Index Fund (NYSEArca: KXI) is the way to accomplish those goals. KXI is nearly seven years old and has $608 million in assets under management. [Going International With Staples ETFs]
KXI is home to 102 stocks and makes good on the international bias advertised in its name. U.S. stocks, such as Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP), account for over 51% of the ETF’s weight. However, the U.K., Switzerland and Japan combine for another 27% of the ETF’s weight and the fund is home to familiar international staples names such as Nestle, Diageo (NYSE: DEO) and Anheuser-Busch InBev (NYSE: BUD).
The international exposure does not mean a dramatic increase in volatility. KXI has a beta of 0.79 against the S&P 500 and a three-year standard deviation of 10.9%, according to iShares data. XLP has a beta of 0.71 and annualized volatility of 9.6%.