“When equity market uncertainty rises, Consumer Staples typically outperforms while Information Technology lags. From a factor perspective, the past decade shows that when equity market uncertainty increases, stocks with high dividend yield and low volatility outperform. In contrast, both high growth stocks and low valuation companies underperform their respective counterparts,” according to part of a Goldman Sachs note posted by Ben Levisohn of Barron’s.
The sustainable nature of the consumer staples sector could help investors weather a potential storm in the summer months. Since April 30, 1945, the S&P 500 rose in price an average 1.4% from May through October, compared to an average 6.8% from November through April, writes Todd Rosenbluth, S&P Global Market Intelligence Director of ETF Research, in a research note.
XLP shows a beta of 0.74 relative to the S&P 500 index – a 1 reading indicates a security with move with the market, but a lower beta implies the security is less volatile than the market.
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Consumer Staples Select SPDR