The Consumer Staples Select Sector SPDR Fund holds 35 S&P 500 consumer staples companies, including Walmart, Costco, Procter & Gamble, Coca-Cola, and Philip Morris. The portfolio is concentrated in staples distribution and retail, beverages, and other categories such as food, household products, tobacco, and personal care. The fund targets mature businesses with pricing power, defensible shelf space, and long-standing dividend programs. It offers a 2.57% yield and charges a 0.08% annual fee. In 2020, the fund rose 11% during the COVID market shock. From November 2021 through December 2022, it gained 8% while QQQ fell 31%. Over five and ten years, XLP underperformed QQQ, reflecting the cost of defense.
"XLP is a concentrated bet on 35 holdings drawn from the S&P 500 consumer staples sector. Walmart alone is 12% of the fund, Costco another 10%, Procter & Gamble 7%, Coca-Cola 6%, and Philip Morris 6%. Consumer staples distribution and retail accounts for roughly 34% of the portfolio, beverages another 19%, with food products, household products, tobacco, and personal care filling the rest."
"These are mature businesses with pricing power, defensible shelf space, and dividend programs older than most fund managers. You collect a 2.57% yield and pay 0.08% a year for the privilege, which is essentially free."
"In calendar 2020, with COVID detonating the market in March, XLP finished the year up 11%. The interesting part is that staples kept pace with a functioning economy while absorbing a once-in-a-generation shock. From November 2021 through the end of December 2022, the Invesco QQQ Trust (NASDAQ:QQQ) fell 31% as rates rose and the prior tech rally unwound, while XLP gained 8%."
"Over the past five years, XLP returned 37% while QQQ returned 121%. Stretch that to ten years and XLP is up 107% against QQQ's 574%. Owning X"
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