In an year of uncertainty, the consumer staples sector has acted as a defensive play for more conservative investors, with an equal-weight consumer staples exchange traded fund standing out from the rest.
The defensive consumer staples sector has been one of the year’s best performing areas of the S&P 500, with the S&P 500 Consumer Staples Index returning 4.0% year-to-date, as investors turned to more conservative plays in a volatile market.
The sustainable nature of the consumer staples sector could also help investors weather a potential storm in the summer months ahead.
While many have turned to the Consumer Staples Select SPDR (NYSEArca: XLP) as a go-to consumer sector play for its deep liquidity, the ETF has not been the best performer. Alternatively, the Guggenheim S&P Equal Weight Consumer Staples ETF (NYSEArca: RHS) and First Trust Consumer Staples AlphaDEX Fund (NYSEArca: FXG) have been standout plays.
Year-to-date, XLP rose 4.8% while RHS increased 5.5% and FXG gained 5.9%. The two alternative index-based consumer sector ETFs also outperformed over the long-run, with RHS showing an average five-year annualized return of 15.9% and FXG returning an average 14.7%, compared to XLP’s 13.3% return.
FXG, though, has underperformed over the past year, rising 5.5%, compared to XLP’s 10.7% gain and RHS’s 14.7% increase.[related_stories]