After rising for the ninth time in 10 sessions Tuesday, the S&P 500 closed the day at another record high. So did the Dow Jones Industrial Average. The NASDAQ Composite is acting like its 1999 again, but that none of that means investors are taking significant risk with sector exchange traded funds.
Perhaps in a sign that sector investors are bracing for another bout of volatility on par with that seen in the first half of October, consumer staples ETFs have been favored destinations in the fourth quarter. Through Nov. 17, the only sector ETF found among the top-10 asset-gathering funds in the current quarter was the Consumer Staples Select Sector SPDR (NYSEArca: XLP). [Safety With Staples ETFs]
XLP has added nearly $1.5 billion since the start of the current quarter. Conversely, investors have departed, in significant fashion, higher beta fare such as materials, industrial and technology sector ETFs. Although the Technology Select Sector SPDR (NYSEArca: XLK) and the iShares U.S. Industrials ETF (NYSEArca: IYJ) hit new highs Tuesday, the two ETFs have lost over $2.4 billion combined this quarter.
Although they are dodging sector ETFs that are perceived to be riskier, investors are being rewarded for their faith in staples ETFs. Including XLP, the largest ETF tracking the sector, five staples ETFs were among the 131 ETFs that hit new all-time highs Tuesday.
That group also includes traditional cap-weighted rivals to XLP, such as the Fidelity MSCI Consumer Staples Index ETF (NYSEArca: FSTA) and the Vanguard Consumer Staples ETF (NYSEArca: VDC), as well as strategic beta options.
FSTA, which has been a primary contributor to the rapid growth of Fidelity’s sector ETF suite, entered November with $181.5 million in assets under management, but that number is now north of $191 million. [Fast Start for Fidelity ETFs]
The First Trust Consumer Staples AlphaDEX Fund (NYSEArca: FXG) and the PowerShares Dynamic Food & Beverage Portfolio (NYSEArca: PBJ), both of which are strategic beta staples plays, made new highs Tuesday. In fact, the pace being set by FXG and PBJ since mid-October makes these ETFs look biotech plays not staples funds.
Since Oct. 16, FXG has cemented its status as this year’s top-performing staples ETF, gaining 12.4%. PBJ impressed as well with a pop of 11.8%. For the month ended Nov. 17, FXG added $131.5 million in new assets. PBJ is among the top-20 asset-gathering PowerShares ETFs over that period, according to issuer data.
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. Currently, the ETF does not hold shares of Coca-Cola (NYSE: KO) or Kraft Foods (NasdaqGS: KRFT), though that may not be a bad thing as PBJ has handily outpaced those stocks over the past month.
PowerShares Dynamic Food & Beverage Portfolio