Seeking Safety With Staples ETFs

The S&P 500 enters Monday on a six-day losing streak and is coming off a 4.2% gain last week, one of its best weekly performances this year.

With last week’s gains, the S&P 500 comes into Monday down just 0.6% this month, putting the benchmark U.S. index to end October, often the most volatile month of the year for stocks, on a positive note. If inflows to sector exchange traded funds are used as a guide, it seems obvious that investors are leaning toward safer sectors even in the wake of last week’s rally.

After sitting on about $1.1 billion in October inflows, the Energy Select Sector SPDR (NYSEArca: XLE) was stung by almost $966 million of outflows late last week. Prior to those redemptions, XLE was one of the top-10 ETFs in terms of fourth-quarter inflows and by far the best sector ETF by that metric. [Returning to Energy ETFs]

Top honors for assets added among sector ETFs in the current now belong to the Consumer Staples Select Sector SPDR (NYSEArca: XLP). XLP, the largest consumer staples ETF by assets, has hauled in almost $972 million in new assets this quarter, a total exceed by just seven other ETFs. Five of those ETFs are bond funds and XLP is now the leader among sector ETFs for fourth-quarter inflows. [Staples ETFs are Loving This Market]

XLP jumped 2.7% last week and although that lagged the S&P 500’s weekly gain, the ETF is up 2.4% this month and resides just pennies away from its all-time high while the S&P 500 is still sitting in the red for October.

XLP’s October performance is made all the more impressive when considering that Coca-Cola (NYSE: KO), the ETF’s second-largest holding at a weight of 9.5%, is one of 17 Dow stocks that have traded lower over the past month. Following a weak earnings update last weeek, Coca-Cola, a favorite holding of Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A), experienced its worst one-day performance in at least six years. Shares of the world’s largest soft drink maker are down 3% in the past month.