1 Sector ETF to Avoid Like the Plague in November

Core Viewpoint - The Consumer Staples Select Sector SPDR Fund (XLP) is advised to be avoided as it has underperformed during a typically strong month for the sector, and its valuation appears high compared to growth prospects [3][4][5][8]. Performance Analysis - The XLP ETF has $14.94 billion in assets under management and has retreated 3.6% for the month ending November 18, resulting in a year-to-date loss of 2.7% and a 6.4% decline over the past six months [4]. - Historically, November has been the second-best month for consumer-packaged goods stocks, with a 70% win frequency over the past 20 years, making the current underperformance particularly concerning [5]. Valuation Concerns - Consumer staples stocks typically trade at higher multiples than the broader market, reflecting their above-average dividend yields and favorable volatility traits; however, some major staples are currently overvalued [8]. - Costco and Walmart, which together account for over 20% of the XLP portfolio, have higher valuation multiples than Nvidia, despite lacking comparable growth prospects [9].