Measuring XLP and XLY, the largest consumer discretionary ETF, against each other is a useful endeavor with some technical analysts believing the ratio of the two ETFS is an important market indicator. While staples stocks and ETFs like XLP are prized conservative income investors and are useful in the early innings of recovery from a bear market, more cyclical fare such as discretionary names arguably should be in favor at this stage of an economic recovery.
The reverse has been true this year, a year after XLY was one of the best of the nine sector SPDR ETFs. In 2014, XLP is up 8% while XLY is higher by just 0.2%.
And money is flowing into staples ETFs. Since the start of this month, XLP has added $289.4 million in new assets while VDC has seen inflows of nearly $71 million. The Fidelity MSCI Consumer Staples Index ETF (NYSEArca: FSTA) has added almost $7 million this month, bringing its assets under management total to $127.3 million. That is up from $31.4 million at the end of May. [Fidelity ETFs Race to $1B in AUM]
Consumer Staples Select Sector
