Consumer staples refer to those products which consumers need for their households, regardless of their financial position or the health of a country’s economy. This can range from food and beverages, hygiene products, household goods, and even tobacco. Considered as basic necessities, these products have a demand no matter what the state of the economy is.
An ETF or Exchange Traded Fund can be best described as a type of security, which tracks any asset, commodity, sector or index. However, the security can be bought or sold like a regular stock on a stock exchange. Investors looking for a broader exposure to the consumer staples sector can invest in consumer staples ETFs.
Here are five consumer staples ETFs to look out for in 2021.
- iShares Europe ETF(IEV)
iShares Europe ETF offers access to more than 350 stocks from more than 12 different European economies. The ETF is ideal for those who prefer a region by region approach to international equities. No single name accounts for a significant portion of assets in the ETF, as it is spread across numerous sectors and markets. Nestle S.A., ASML Holding NV, Roche Holding Ltd and Novartis AG account for the largest holdings in the ETF.
- Columbia Emerging Markets Consumer ETF(ECON)
ECON offers investors access to consumer staples in emerging economies. It focuses on a corner of the market often overlooked by cap-weighted products which is the backbone of the growth story of many emerging markets. The ETF is a pure-play on emerging markets, and actively avoids quasi developed countries like South Korea and Taiwan. Investors looking for a more balanced exposure can check out this ETF for its focus on a narrow slice of emerging markets. NetEase, Inc. Sponsored ADR, Hindustan Unilever Limited, Tencent Holdings Ltd. and Alibaba Group Holding Ltd. Sponsored ADR accounts for the largest holdings in the ETF.
- iShares U.S. Consumer Goods ETF(IYK)
iShares U.S. Consumer Goods ETF provides investors with exposure to the American domestic consumer market. It focuses only on consumer goods and excludes consumer services. It is a nice tool for investors looking to implement a sector rotation strategy or a tactical overlay. However, it’s too fine-tuned for long-term investing. Compared to other ETFs on this list, the IYK is lacking in diversification. Tesla Inc, Procter & Gamble Company, Coca-Cola Company and PepsiCo, Inc, account for the largest holdings in the ETF.
- Fidelity Covington Trust Msci Consumer Staples Index ETF(FSTA)
This ETF offers investors exposure to consumer staples making it ideal for investors who are looking to implement a sector rotation strategy, focused on the corners of the American market that are expected to perform well during an economic downturn. FSTA includes about 90 stocks including many small-cap companies. Procter & Gamble Company, Coca-Cola Company, PepsiCo, Inc. and Walmart Inc. account for the largest holdings in the ETF.
- Invesco DWA Consumer Staples Momentum ETF( PSL)
PSL is one of the most dynamic ETFs offered by PowerShares. The underlying index tracked by it employs a quant-based analytical framework when selecting holdings. This ETF is for those investors who prefer the intellidex methodology. Monster Beverage Corporation, Coty Inc. Class A, Medifast, Inc. and Estee Lauder Companies Inc. Class A accounts for the largest holdings in the ETF.
ETFs are a great way to gain exposure to a variety of different stocks without the need to own them individually. There are some brokers that do not charge commissions while residing on certain ETFs, driving the expenses further down. Investors should thus conduct their own research about the holdings of an ETF and its expense ratio before investing in a particular ETF.
