Two consumer staples ETFs go head-to-head on size, history, and structure—see what sets them apart for portfolio builders.The Vanguard Consumer Staples ETF (VDC) (VDC 0.52%) and the Fidelity MSCI Consumer Staples Index ETF (FSTA) (FSTA 0.48%) both target U.S. consumer staples, but VDC stands out for its much larger assets under management (AUM) and longer track record.Both funds aim to capture the U.S. consumer staples sector, making them potential core options for those seeking defensive equity exposure. T ...

Core Insights - The Vanguard Consumer Staples ETF (VDC) and the State Street Consumer Staples Select Sector SPDR ETF (XLP) provide exposure to the U.S. consumer staples sector, with XLP being slightly cheaper and offering a higher yield, while VDC has a broader portfolio and better five-year returns [1][2][8] Cost & Size - VDC has an expense ratio of 0.09% and assets under management (AUM) of $8.6 billion, while XLP has a lower expense ratio of 0.08% and a larger AUM of $15.3 billion [3][4] - The one-year return for VDC is -2.4% compared to XLP's -3.4%, and the dividend yield for VDC is 2.2% versus XLP's 2.7% [3][4] Performance & Risk Comparison - Over five years, VDC has a maximum drawdown of -17.6% and has grown $1,000 to $1,246, while XLP has a maximum drawdown of -17.8% and has grown $1,000 to $1,180 [5] Portfolio Composition - XLP holds 36 stocks with a 100% allocation to consumer defensive companies, led by Walmart (11.9%), Costco Wholesale (9.2%), and Procter & Gamble (7.8%) [6] - VDC has a broader approach with 105 holdings, 98% in consumer defensive, and top positions including Walmart (14.2%), Costco Wholesale (13.0%), and Procter & Gamble (11.2%) [7] Investor Considerations - XLP's lower expense ratio and higher yield may attract cost- and income-focused investors, while VDC's broader portfolio and stronger five-year total return may appeal to those seeking diversification [8][10] - The concentration of XLP with only 36 stocks could be a risk if the largest holdings underperform, whereas VDC's wider scope may provide better resilience [9][10]

Core Insights - The Consumer Staples sector is viewed as a defensive haven for investors during economic turbulence and high inflation due to the inelastic demand for essential goods [1][2] - The current U.S. economy is facing persistent inflation and a softening job market, with the unemployment rate rising to 4.4% in September 2025, the highest since October 2021 [4][6] - Consumer sentiment has declined, leading households to prioritize spending on core necessities while reducing discretionary spending [7][9] Economic Environment - The Federal Reserve has been cutting interest rates to support the job market, but these measures alone are insufficient to stimulate the economy [4][5] - Unfavorable trade policies, including tariffs, are acknowledged as critical headwinds affecting inflation [5][6] Consumer Behavior - A shift in consumer spending is evident, with a focus on affordable options and core necessities like meat and dairy, impacting retailers differently [8][10] - A McKinsey & Company survey indicates that consumers plan to spend more on core categories in the fourth quarter, reflecting a prioritization of necessities [10] Investment Opportunities - Amid economic uncertainty, consumer staple ETFs are recommended for investors seeking stability [11][12] - The Consumer Staples Select Sector SPDR ETF (XLP) has $14.9 billion in assets, with a year-to-date gain of 1.4% [13] - The Vanguard Consumer Staples ETF (VDC) has $7.3 billion in assets and a year-to-date gain of 2.4% [14] - The iShares U.S. Consumer Staples ETF (IYK) has $1.19 billion in assets and a year-to-date gain of 4.1% [15]

Core Insights - The article compares two consumer staples ETFs: Vanguard Consumer Staples ETF (VDC) and State Street Consumer Staples Select Sector SPDR ETF (XLP), highlighting their similarities and differences in terms of holdings, performance, and cost [6][9]. Fund Overview - Vanguard Consumer Staples ETF (VDC) includes 103 stocks, providing broader coverage in the consumer defensive sector, with significant holdings in Walmart, Costco Wholesale, and Procter & Gamble [2]. - State Street Consumer Staples Select Sector SPDR ETF (XLP) focuses on 37 companies, primarily large-cap stocks, and aims to mirror the Consumer Staples Select Sector Index [3]. Performance Metrics - XLP offers a higher dividend yield of 2.7% compared to VDC's 2.2%, making it more appealing for income-focused investors [7]. - Both funds have low expense ratios and solid long-term performance histories, making them suitable for buy-and-hold investors [9]. Holdings Composition - XLP has a higher weighting in consumer non-durables, while VDC has a greater focus on retail stocks [8]. Investment Considerations - Income-oriented investors may prefer XLP due to its higher dividend yield, while those bullish on retail may favor VDC [9].

Core Insights - The Vanguard Consumer Staples ETF (VDC) offers lower costs and greater diversification compared to the iShares US Consumer Staples ETF (IYK), which has shown slightly better recent performance and a marginally higher yield [1][2]. Cost and Size Comparison - IYK has an expense ratio of 0.38%, while VDC has a significantly lower expense ratio of 0.09%, making VDC more cost-effective for investors [3][8]. - As of December 1, 2025, IYK's one-year return is -2.7% and VDC's is -3.5% [3]. - IYK has a dividend yield of 2.43% compared to VDC's 2.22%, indicating a slight advantage for IYK in terms of income generation [3]. - VDC has assets under management (AUM) of $8.3 billion, significantly higher than IYK's $1.3 billion [3]. Performance and Risk Comparison - Over a five-year period, IYK experienced a maximum drawdown of -15.04%, while VDC had a drawdown of -16.56% [4]. - An investment of $1,000 in IYK would have grown to $1,268 over five years, compared to $1,254 for VDC [4]. Holdings and Sector Focus - VDC consists of 105 holdings, with 98% in consumer defensive stocks, including major positions in Walmart, Costco Wholesale, and Procter & Gamble [5]. - IYK has a smaller portfolio of 55 holdings, with a notable 11% allocation to healthcare stocks, and its largest holdings include Procter & Gamble, Coca-Cola, and Philip Morris International [6]. Investment Strategy - Both ETFs provide exposure to the consumer defensive sector, which tends to perform well during market volatility [7]. - VDC focuses almost entirely on consumer defensive stocks, while IYK includes a significant allocation to healthcare, offering a different approach to sector exposure [9].

Market Performance - The S&P 500 has lost approximately 2.6% since the beginning of November and around 2.5% over the past week as of November 17, indicating increasing volatility and investor nervousness [1] - The CBOE Volatility Index has surged nearly 35% since November 11, reflecting heightened concerns about valuations and a potential AI bubble [1] Interest Rate Outlook - Markets are currently pricing in a 46.6% likelihood of another interest rate cut in December, a significant decrease from previous expectations [2] - Retail investors are showing reduced confidence in a U.S. market rebound, with dip-buying activity slowing as stocks retreat from recent highs [2] AI Bubble Concerns - Fears regarding inflated AI valuations are contributing to broader market pressures, with the tech-heavy Nasdaq Composite dropping about 4.8% since the beginning of November and 3.2% over the past week [3] - Concerns over the sustainability of the AI boom highlight sector concentration risks and potential systemic vulnerabilities, which can lead to negative market reactions and investor panic [4] Investment Strategies - Investors are advised to adopt a defensive and conservative investment approach to navigate potential market volatility [6] - Increasing allocations toward defensive funds may provide a balance between participating in potential upside and protecting against volatility [7] ETF Recommendations - Value ETFs, such as Vanguard Value ETF (VTV), iShares Russell 1000 Value ETF (IWD), and iShares S&P 500 Value ETF (IVE), are characterized by solid fundamentals and represent undervaluation [8] - Consumer staple ETFs, including Consumer Staples Select Sector SPDR Fund (XLP), Vanguard Consumer Staples ETF (VDC), and iShares U.S. Consumer Staples ETF (IYK), can provide stability and balance to portfolios [10] - Quality ETFs, such as iShares MSCI USA Quality Factor ETF (QUAL), Invesco S&P 500 Quality ETF (SPHQ), and JPMorgan U.S. Quality Factor ETF (JQUA), offer a strategic response to market uncertainty [11] Investment Strategies for Stability - Investors may consider passive, long-term strategies like buy-and-hold or dollar-cost averaging to navigate potential near-term pullbacks while positioning for sustainable returns [12][13]

Market Performance - The S&P 500 ended October with a 1.9% increase, marking its sixth consecutive monthly gain, the longest stretch in four years [1][2] - The index continued its upward momentum into November, adding approximately 0.18% on the first Monday of the month [1] Economic Outlook - Progress in the U.S.-China trade agreement, the Federal Reserve's interest rate cut in October, and rising AI demand contribute to a positive outlook for the U.S. economy [2] - Despite the optimistic economic picture, underlying volatility risks remain, suggesting a cautious approach may be prudent [2][5] Volatility Concerns - Ongoing government shutdown, diminishing expectations for a December rate cut, and worries about a potential AI bubble may increase market volatility [3][4] - The sustainability of the U.S.-China trade truce is questioned, adding to investor anxiety [3] Market Predictions - Goldman Sachs and Morgan Stanley predict a potential 10-20% market pullback within the next 12 to 24 months, which is typical in long-term bull markets [6][7] - Both firms emphasize that periodic pullbacks should be viewed as healthy market corrections rather than crises [8] Investment Strategies - Investors are advised to adopt a defensive and conservative investment theme to navigate potential market turbulence [9] - Increasing allocations toward defensive funds while maintaining exposure to growth-oriented investments may be a sound strategy [10] ETF Recommendations - Value ETFs, characterized by solid fundamentals and trading below intrinsic value, have shown positive performance, with the S&P 500 Value Index gaining 7.52% year to date [12] - Consumer staple ETFs provide stability, with the S&P 500 Consumer Staples Index up 3.20% year to date, making them a good option for risk-averse investors [13] - Quality ETFs are recommended as a strategic response to market uncertainty, offering a buffer against potential headwinds [14] Investment Strategies for Stability - Passive, long-term strategies such as buy-and-hold or dollar-cost averaging are suggested to help investors navigate potential pullbacks while positioning for sustainable returns [15][16]

Core Insights - The Vanguard Consumer Staples ETF (VDC) and the iShares US Consumer Staples ETF (IYK) are both focused on leading U.S. consumer staples companies, but they differ in cost, diversification, and portfolio tilt [1] Cost & Size Comparison - IYK has an expense ratio of 0.38%, while VDC is more affordable at 0.09%, making it cheaper by 0.29 percentage points [2][3] - As of October 27, 2025, IYK has an AUM of $1.3 billion, whereas VDC has a significantly larger AUM of $8.5 billion [2] Performance & Risk Metrics - Over the past five years, IYK has a max drawdown of -15.05%, compared to VDC's -16.54% [4] - A $1,000 investment in IYK would have grown to $1,417 over five years, while the same investment in VDC would have grown to $1,344 [4] Holdings Overview - VDC consists of 103 holdings, primarily in the consumer defensive sector (98%), with major positions in Walmart, Costco, and Procter & Gamble [5] - IYK is more concentrated with 55 holdings and includes a 10% allocation to healthcare stocks, featuring top holdings like Procter & Gamble, Coca-Cola, and Philip Morris International [6] Total Return Analysis - Over the past five years, IYK delivered a total return of 57%, while VDC provided a total return of 51% [8] - In a 10-year timeframe, IYK's total return was 132%, outperforming VDC's 110% [9] Dividend Performance - The latest quarterly dividend payment for VDC was 28.1% lower than five years ago, indicating disappointing cash flow growth for investors [10] - Conversely, IYK's latest dividend payment was 108% higher than the payout from a year earlier, showing positive growth in dividends [10]

Core Insights - Concerns are rising over a potential AI bubble on Wall Street, with warnings that the sector's rapid gains may be overextended [1][3] - Approximately half of the S&P 500's $57 trillion market cap has significant or moderate exposure to AI, indicating a high concentration risk [1] - Long-term investors are advised to diversify their portfolios to mitigate risks associated with overconcentration in the AI sector [2][8] Market Sentiment - The Bank of America Global Fund Manager Survey identified an "AI equity bubble" as the top global tail risk for the first time [3] - Barclays strategists express optimism about AI in the next 12-18 months but caution about insufficient energy infrastructure for expanding data centers [4] - The Bank of England and IMF have warned that global markets may face challenges if the AI boom loses momentum, highlighting U.S. tariffs and high stock valuations as additional risks [5] Valuation Concerns - JPMorgan CEO Jamie Dimon emphasized the need for caution due to high asset valuations and stretched credit spreads [6] - Goldman Sachs noted that increased debt issuance by big tech firms, coupled with declining cash reserves, points to growing systemic risk [7] Investment Strategies - Diversification into ETFs focusing on value sectors or equal-weighted strategies is recommended to reduce concentration risk while capturing upside potential [9] - Equal-weighted ETFs provide sector-level diversification, with the S&P 500 Equal Weight Index gaining 7.59% year to date [11] - Value ETFs, characterized by solid fundamentals and trading below intrinsic value, have also shown gains, with the S&P 500 Value Index up 7.52% year to date [12] - Increasing exposure to consumer staple ETFs can provide balance and stability, as the S&P 500 Consumer Staples Index has gained 3.20% year to date [13] - Adding international equity ETFs can broaden geographical exposure and strengthen overall diversification, with the S&P World Index rising 14.48% over the past year [15]

Market Overview - The U.S. stock market is experiencing a significant rally, with major indices reaching new highs, primarily driven by the growth of artificial intelligence (AI) and tech stocks [1] - Analysts and economists express concerns that this rally may be a speculative bubble, indicating a potential market correction in the near future [3][4] Defensive Sector ETFs - Investors may shift their focus towards Exchange-Traded Funds (ETFs), particularly defensive sector ETFs, which have historically provided protection against losses during economic downturns [2] - Defensive sector ETFs are seen as a safe harbor during periods of market turbulence, with sectors like consumer staples, utilities, and healthcare being favored for their stability [7] Consumer Staples ETFs - Consumer staples ETFs offer exposure to essential goods companies, which are less sensitive to economic cycles [8] - Notable consumer staples ETFs include Consumer Staples Select Sector SPDR Fund (XLP), Vanguard Consumer Staples ETF (VDC), and iShares Global Consumer Staples ETF (KXI) [8] - XLP is highlighted as the cheapest option, with fees of 8 basis points and assets under management (AUM) of $15.7 million [9] Utility ETFs - Utility ETFs are characterized by steady demand and relative protection from trade and policy disruptions [10] - Key utility ETFs to consider include Utilities Select Sector SPDR ETF (XLU), iShares U.S. Utilities ETF (IDU), and Vanguard Utilities ETF (VPU) [10] - XLU is noted as the most cost-effective option, charging 8 basis points in fees and having AUM of $21.9 million [11] Healthcare ETFs - The healthcare sector is resilient due to the ongoing demand for medical services and innovations [12] - Prominent healthcare ETFs include iShares Global Healthcare ETF (IXJ), Vanguard Health Care ETF (VHT), and Health Care Select Sector SPDR Fund (XLV) [12] - XLV is identified as the cheapest option, with fees of 8 basis points and AUM of $36.1 million [12] Market Valuation Concerns - The Shiller P/E ratio is currently at 46.2%, significantly above the 20-year average of 27.2, indicating that the market may be overvalued and future returns could be limited [5] - The concentration of investments in a few tech giants raises concerns about fragility in the market, as small earnings setbacks could lead to sharp declines [6]