A Different Type of Staples ETF Runs to new Highs

Consumer staples exchange traded funds bled over $2.3 billion in March despite falling 10-year Treasury yields as investors continued betting an interest rate hike from the Federal Reserve is imminent.

That is not to say staples ETFs have been duds this year. They have not been and as much is highlighted by an average year-to-date gain of over 2% for the Consumer Staples Select Sector SPDR (NYSEArca: XLP), the largest consumer staples ETF, and the Vanguard Consumer Staples ETF (NYSEArca: VDC).

As is sometimes the case with equal-weight ETFs, the Guggenheim S&P Equal Weight Consumer Staples ETF (NYSEArca: RHS) is trumping its cap-weighted counterparts this year with a gain of nearly 4.8%.

“On a market-cap-weighted basis, the household products industry’s profit growth in 2015 is expected to be 0.7%, below its own five-year average of 1.8% as well as the estimated profit growth of 1.5% for the consumer staples sector, due to rising foreign currency exchange pressures and slowing international growth,” said S&P Capital IQ in a new research note.

RHS, which debuted in 2006 eschews single-stock and strong dollar risk with significantly reduced weights to household products dividend darlings like Procter & Gamble (NYSE: PG) and Kimberly-Clark (NYSE: KMB). Those stocks combine for just 5.1% of RHS’ weight.

The equal-weight ETF, rated marketweight by S&P Capital IQ, is more heavily allocated to food and beverage names with those industries combining for nearly 59% of the fund’s weight. Eight of RHS’ top 10 holdings are food or beverage makers. [A Buffett Deal Could Lift These ETFs]