These 3 Consumer Staples ETFs May Provide Shelter in a Turbulent Market

With the S&P 500 officially in correction territory and mounting fears that tariffs and trade wars will lead to a nasty economic downturn, it’s not too difficult to envision the 10% drawdown turning into a 20% one. Indeed, as the bear market moves closer to coming out of hibernation, investors who’ve found their portfolios have taken a bigger hit may wish to start rotating into less-choppy names sooner rather than later.

Of course, it may very well be too late to take profits in high-multiple tech stocks for some of those old-fashioned, stable consumer staple stocks or ETFs. But if you’re having difficulty handling the recent volatility surge, perhaps it’s better to make adjustments now than run the risk of experiencing continued amplified damage in the event of an intensification of this tariff-induced sell-off.

In this piece, we’ll check out three interesting consumer staple ETFs that make it easy to inject your portfolio with added stability.

Consumer Staples Select Sector SPDR Fund 

The Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) is one of the more popular consumer staples ETFs to pick up in anticipation of hard times. Undoubtedly, if Trump tariffs do send us into a recession, a heavier weighting towards the consumer staples could help lessen any further pains throughout the year. Undoubtedly, Trump suggested that economic pain is on the horizon, and there’s every bit of reason to believe such a “transition period” could prove incredibly disruptive and destructive to our portfolios.

Indeed, if “no pain, no gain” is the mantra, an ETF like the XLP seems like a must-own. It’s a low-cost sector ETF with a very low 0.08% expense ratio and some of the more durable and resilient names that can better withstand an economic tumble that could set the stage for a new bear market.

The XLP’s top four positions are Proctor & Gamble (NYSE:PG), Costco (NASDAQ:COST), Walmart (NYSE:WMT), and Coca-Cola (NYSE:KO), which comprise close to 35% of the ETF, are recession-resilient firms that can ride out of a painful patch in markets. Whether the “pain” lasts another month, the rest of the year, or longer, more defensively-minded investors would be glad to hold such a lower-beta basket (0.56 beta) of stocks as tides turn lower for a change. The yield is also quite enticing at 2.62%.

Vanguard Consumer Staples ETF

The Vanguard Consumer Staples ETF (NYSEARCA:VDC) is another low-cost option (also a 0.09% expense ratio) that can help shift your portfolio towards a wide range of defensives. Undoubtedly, there’s a lot of overlap with the XLP, so it doesn’t make a whole lot of sense to own both. Either way, if you want an even heavier weighting to Costco, Walmart, and Proctor & Gamble, the VDC may be the one to reach for. Though, do note that a much smaller percentage will be sprinkled across around 100 consumer staple stocks.

With a 2.19% yield and a 0.6 beta, the VDC stands out as a great way to batten down the hatches. Though the VDC seems like it could be a slightly rockier ride, with less yield, I view it as slightly more growth-focused, primarily because of the relative heaviness in Costco as well as exposure to some of the smaller-cap staples in the U.S.

In short, if you want broader exposure with slightly more heaviness at the top, the VDC could be the go-to option.

iShares Global Consumer Staples ETF

The iShares Global Consumer Staples ETF (NYSEARCA:KXI) offers a global way to play the consumer staples. If you’re looking for added stability from tariffs, perhaps broadening one’s international horizons could make a lot of sense. The expense ratio is 0.41%, much higher than the XLP or VDC. If you want exposure beyond the U.S. market, though, that’s the price of admission, which, I believe, could be worth paying for.

With the KXI, you’ll get exposure to non-U.S. staples such as Nestle (NSRGY), Unilever (NYSE:UL), and L’Oréal, three big names that can pay big dividends. Finally, the 0.62 beta and 2.36% yield put it on par with the VDC.

So, which consumer staples ETF is right for you?

Ultimately, it depends on your needs. If you want more international exposure, the KXI is a solid bet. If you seek to minimize fees and beta while maximizing yield, the XLP could be the way to go. Finally, if you’re looking for broader U.S. exposure with low fees, the VDC is a terrific middle ground. Personally, I think you can’t go wrong with any one of the three.

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