If investors had one wish these days, it’s to wipe away the panic of the coronavirus effects in the capital markets–with toilet paper–that is if they can get their hands on any. Right now, there’s a toilet paper-buying frenzy going on in grocery stores, which ETF investors can take advantage of with funds that hold Procter & Gamble–the company that offers a well-known toilet paper brand: Charmin.
Toilet paper mania these days is akin to the tulip-buying bonanza in the 1600s. Between 1634 and 1637, tulips were highly sought after for their rarity and exotic beauty, which caused them to be incredibly overvalued when “Tulipmania” reached a fever pitch in the Netherlands.
The perceived value of the tulip bulbs created a market of flippers, investors who purchase an asset and sold it later at a higher price for profit, who capitalized on the demand for tulips–demand-fueled speculation was apparently so high that the price of one tulip reached $10,000 in today’s valuation. Eventually, “Tulipmania” withered sharply as sellers were desperate to unload with no buyers in sight as the tulip market crashed and brought the whole Netherlands economy with it, resulting in a mild economic depression that wouldn’t subside until years later.
Fast forward to today–will toilet paper upend the economy the same way? Probably not, but ETF investors might as well take advantage of the mania with three funds that have the heaviest weightings in Procter & Gamble.
For starters, the Consumer Staples Select SPDR (XLP) ETF has the highest exposure to Procter & Gamble, coming in with a16.15% weighting as of March 14. XLP seeks to provide investment results that correspond generally to the price and yield performance of publicly traded equity securities of companies in the Consumer Staples Select Sector Index that includes securities of companies from the following industries: food and staples retailing; household products; food products; beverages; tobacco; and personal products.
Key features of XLP:
- The Consumer Staples Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Consumer Staples Select Sector Index (the “Index”)
- The Index seeks to provide an effective representation of the consumer staples sector of the S&P 500 Index
- Seeks to provide precise exposure to companies from the food and staples retailing, beverage, food product, tobacco, household product, and personal product industries in the U.S.
- Allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing
Here are two more ETFs with Procter & Gamble exposure:
- Fidelity MSCI Consumer Staples Index ETF (FSTA): seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Consumer Staples Index. The fund invests at least 80% of assets in securities included in the fund’s underlying index. The fund’s underlying index is the MSCI USA IMI Consumer Staples Index, which represents the performance of the consumer staples sector in the U.S. equity market. It may or may not hold all of the securities in the MSCI USA IMI Consumer Staples Index.
- Vanguard Consumer Staples Index Fund ETF Shares (VDC): seeks to track the performance of a benchmark index. The fund employs an indexing investment approach designed to track the performance of the MSCI US Investable Market Index/Consumer Staples 25/50, an index made up of stocks of large, mid-size, and small U.S. companies within the consumer staples sector, as classified under the Global Industry Classification Standard. The Advisor attempts to replicate the target index by seeking to invest all, or substantially all, of its assets in the stocks that make up the index, in order to hold each stock in approximately the same proportion as its weighting in the index.
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