After some struggles to start 2014, consumer staples exchange traded funds have gotten their respective acts together, notching some impressive performances off their February bottoms.
One of the more impressive consumers staples ETFs since the start of February is the PowerShares Dynamic Food & Beverage Portfolio (NYSEArca: PBJ), an ETF that breaks from the traditional cap-weighted staples ETFs in at least two ways.
First, PBJ is an alternatively-weighted ETF. Second, due to the ETF’s focus on food and beverage names, PBJ features no exposure to the other usual suspects of the staples sector, such as household goods makers, tobacco companies or retailers like Wal-Mart (NYSE: WMT).
PBJ tracks the Dynamic Food & Beverage Intellidex Index, which evaluates possible constituents based on earnings and price momentum while also employing a quality filter and screening for management action and value.
That does lead to some of the staples sector’s most familiar names residing among PBJ’s 30 holdings, including Coca-Cola (NYSE: KO), Mondelez (NasdaqGS: MDLZ) and General Mills (NYSE: GIS). Up 7.4% this year, PBJ has also gotten a lift from its 2.9% weight to Green Mountain Coffee Roasters (NasdaqGS: GMCR), shares of which have surged nearly 65%. [Green Mountain Jolts This ETF]
Although it does not hold tobacco stocks, PBJ has also received some help from sin stocks. Brown Forman (NYSE: BF-B), Molson Coors (NYSE: TAP) and Constellation Brands (NYSE: STZ) combine for about 11% of PBJ’s weight and those stocks have posted an average of 2014 gain of 27%.
PBJ may be small compared to some of its cap-weighted rivals, but the ETF is far from too small to be investable or “obscure” status. PBJ has $331.5 million in assets under management, $78.7 million of which has come into the fund just this year, according to PowerShares data.
In fact, PBJ enjoys something of a cult following due to its status as a home to multiple stocks that have previously been mentioned as credible takeover targets and its status as an ETF chock full some of the staples sector’s most shorted stocks. [ETFs for Hedge Fund Shorts]
Those are nice superlatives, but the better way of viewing PBJ is that it is a solid staples offering, a legitimate alternative to cap-weighted equivalents and as one just 26 ETFs that made new all-time highs on Monday.
PowerShares Dynamic Food & Beverage Portfolio
Tom Lydon’s clients own shares of Coca-Cola.