The inflation in the US is gaining momentum, e latest data posting a 4.20% YoY figure, with a target of just 2%. The Fed is not going to cut its quantitative easing (QE) program any time soon, which means this trend might well continue. When this is the case, consumer goods companies may act as safe havens, as the production costs are finally paid by the consumers, while the rising prices do not affect the demand that much, and the earnings stay high. In particular, there are two ETFs with good potential one may invest into: XLP.US and VDC.US.
1. Consumer Staples Select Sector SPDR Fund
Current Price: $71.20
This ETF contains essential goods company stocks, which makes it suitable for those who want to protect themselves from inflation. This fund has a conservative strategy, which means it should work well during the market decline. XLP offers impressive liquidity and high extent of diversification, making it one of the best consumer goods ETFs out there.
The fund tracks the Consumer Staples Select Sector Index.
Assets under management: $10.85B
Dividend yield: 2.49%
Expense Ratio: 0.12%
Number of stocks in ETF: 33
Companies with the largest share:
- Procter & Gamble Company: 15.90%
- Coca-Cola Company: 9.90%
- PepsiCo, Inc.: 9.45%
- Walmart, Inc.: 8.97%
- Costco Wholesale Corporation: 4.82%
Countries with the largest share: US, 99.90%
Sectors with the largest share: Consumer non-durables, 78.30%
Average P/E ratio: 21.30х
YTD yield: 5.69%
2. Vanguard Consumer Staples ETF
Current Price: $185.20
This ETF mostly targets buy & hold investors, as it consists of consumer goods stocks; however, this is also a good option for those aiming for a low risk portfolio. Vanguard has a unique structure that allows it to have 97 different stocks and avoid too much focus on large cap companies. With its being focused on consumer goods and having this structure, VDC.US is a great safe haven in times of fast rising inflation.
This ETF tracks the MSCI US Investable Market Consumer Staples 25/50 Index.
Assets under management: $5.74B
Dividend yield: 2.55%
Expense Ratio: 0.10%
Number of stocks in ETF: 97
Companies with the largest share:
- Procter & Gamble Company: 14.10%
- Coca-Cola Company: 8.80%
- PepsiCo, Inc.: 7.90%
- Walmart, Inc.: 7.90%
- Costco Wholesale Corporation: 5.60%
Countries with the largest share: US, 99.60%
Sectors with the largest share: Consumer non-durables, 74.10%
Average P/E ratio: 25.60х
YTD yield: 7.17%
How to Buy ETFs?
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy ETFs in either of the following ways:
Freedom24 Web Platform: In the Web Terminal section, type XLP.US (Consumer Staples Select Sector SPDR Fund ticker) and VDC.US (Vanguard Consumer Staples ETF ticker) in the search box, and select the appropriate ETF in the results. Open a secure session in the trading window on the right, select the number of securities you want to buy, and click Buy.
Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type XLP.US (Consumer Staples Select Sector SPDR Fund ticker) and VDC.US (Vanguard Consumer Staples ETF ticker), and select the appropriate ETF in the results. You will then see the ETF in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of securities you want to buy and click Buy.
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