Another way of looking at FXG is that the ETF has benefited from the long-standing out-performance of mid-caps relative to broader U.S. indices. By not being heavily allocated to the most popular staples names, such as Procter & Gamble and Coca-Cola (NYSE: KO), FXG is able to offer more of a growth feel to a sector more associated with defense, not growth. [Super Staples ETFs]
Searching for growth opportunities among staples can prove rewarding. FXG proves as much. FXG’s top-five holdings, a group that combines for nearly a quarter of the ETF’s weight, have returned an average of 55.3% this year. Underscoring that quintet’s and FXG’s strength, the worst performer of that group, Hain Celestial (NasdaqGS: HAIN), is up more than 27%.
There are sacrifices to be made for the privilege of FXG’s out-performance, namely the ETF’s dividend yield is skimpy compared to traditional rivals. That is the result of heavier exposure to growth-ier staples that have not established dividend track records on par with Procter & Gamble and Coca-Cola. FXG’s trailing 12-month yield is 100 basis points below XLP’s.
FXG’s underlying index, the StrataQuant Consumer Staples Index, has a three-year standard deviation of 12% compared to 9.6% for the S&P Consumer Staples Index while the latter has a slight higher Sharpe Ratio, according to First Trust data.
First Trust Consumer Staples AlphaDEX Fund