With so much talk about the reflation trade and cyclical stocks coming back into focus, defensive sectors like consumer staples are lagging.

However, conservative investors and retirees can find opportunities with assets like the Consumer Staples Select SPDR Fund (NYSEArca: XLP).

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.

“Consumer staples stocks have significantly lagged behind the broader market’s rally over the past year. Now is a good time to scoop up those stocks, according to Morgan Stanley,” reports Jacob Sonenshine for Barron’s.

XLP 1 Year Total Return

Considering Consumer Staples?

The consumer staples segment has long been viewed as a high-quality defensive play. The slow and steady nature of the consumer staples business has long been touted as a safe play for all periods since consumers always need to buy the basic necessities.

“The fundamental driver of the move into staples, the strategists note, is that the rise in economic activity is showing signs of slowing down. Personal income has recently been running at its pre-pandemic level, excluding government payments, according to economists at Morgan Stanley,” according to Barron’s.

See also: Top 22 Consumer Staples ETF List

Morgan Stanley “strategists said investors have already recognized that the growth rate of personal income coming out of the pandemic has probably peaked. That should lead investors to favor companies that maintain their revenue and earnings trajectories in any economic environment, such as large-cap consumer staples,” concludes Barron’s.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.