As the stock market, oil market, and gold market continue to be ravaged by the coronavirus contagion, it’s understandably challenging to start looking for new investment opportunities, and possibly wise to sit on the sidelines for many investors.
Headline news catalogs the devastation of businesses on a daily basis, noting that the economic fallout will continue for months, and at this point, we just have no clue when COVID-19 will be resolved. However, one thing that seems to be a continuing theme is an investment in consumer staples, as the public seeks refuge within their homes, amid a haven of Clorox bleach, Coca-cola, and toilet paper. These are goods that will continue to be necessary regardless of the landscape, and some states are even mandating that stores remain open to sell them. To this end, here are two consumer staples ETFs that are likely to benefit (eventually) from the coronavirus epidemic.
XLP is a classic. With top holdings that include Walmart, PepsiCo, and Proctor and Gamble among others, the fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of publicly traded equity securities of companies in the Consumer Staples Select Sector Index, making it an ideal investment during times when consumers are stocking up on supplies for a global pandemic.
In seeking to track the performance of the index, the fund employs a replication strategy. It generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The index includes securities of companies from the following industries: food and staples retailing; household products; food products; beverages; tobacco; and personal products. The fund is non-diversified, but XLP is down 16.26% while the broader market is getting ravaged, down closer to double that.
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. The fund is non-diversified and holds big names like Microsoft, Apple, and Mondelez International, which will be necessary for technology products as workers survive in the home office and eat snacks for energy.
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