With higher beta, cyclical sectors leading U.S. equity markets higher this year, some defensive sectors are lagging. That is the case with consumer staples. Amid fears of rising interest rates and concerns that the sector is overvalued even relative to its lofty historical norms, the consumer staples sector has recently encountered some headwinds.
The sector is lower by 17% over four months, but that tumble could give way to some upside. Sundial Capital Research’s Jason Goepfert notes when the sector has experienced such dramatic declines, “that has led to a positive return over the next year every time but once,” according to Barron’s.
Rivals to XLP include the Vanguard Consumer Staples ETF (NYSEArca: VDC) and the Fidelity MSCI Consumer Staples Index ETF (NYSEArca: FSTA).
For more information on the consumer sector, visit our consumer staples category.