XLP ETF

Designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market, the Consumer Staples Select Sector SPDR ETF (XLP) is a passively managed exchange traded fund launched on 12/16/1998.

The Consumer Staples Select Sector SPDR® Fund ETF is recommended for portfolio stability and long-term steady returns, especially for low-risk tolerance investors. Despite underperforming in a tech-driven bull market, consumer staples are financially sound, with expected 7.5% average earnings growth over the next 3-5 years. XLP offers targeted exposure to high-quality, large-cap companies with strong brand recognition, solid business models, and consistent dividend growth.

XLP offers resilience in economic recessions with a low beta ratio of 0.58, providing better downside protection than the broader market. Despite its stability, XLP has a weak growth profile, with mid- to low-single digit revenue growth expected through 2026. Receding inflation should improve profit margins and lead to higher earnings growth rates of 6.2% and 7.9% in 2025 and 2026.

The Consumer Staples Select Sector SPDR® Fund ETF is a good defensive investment option in volatile markets, with potential for growth and resilience during economic downturns. The XLP fund holds 38 companies, with top positions in Procter & Gamble, Costco, Walmart, and Coca-Cola, providing diversification within the sector. Comparison with the Vanguard Consumer Staples ETF shows XLP has slightly underperformed, but both are solid options for exposure to consumer staples.

If you're interested in broad exposure to the Consumer Staples - Broad segment of the equity market, look no further than the Consumer Staples Select Sector SPDR ETF (XLP), a passively managed exchange traded fund launched on 12/16/1998.

The Consumer Staples Select Sector SPDR Fund ETF offers exposure to recession-resistant companies that provide household products and basic items. This ETF has a low expense ratio and has delivered annual returns of 6.8% since its inception in 1988. The top holdings of this ETF include Procter & Gamble, Costco Wholesale, and Walmart, offering a defensive position for investors.

Investors looking for momentum may be interested in the Consumer Staples Select Sector SPDR Fund XLP, which recently reached a 52-week high and has increased by 19% from its low of $65.18 per share.

XLP offers exposure to defensive consumer staples sector stories that are less affected by economic cycles, although it may not garner much investor attention. I am recommending a Hold rating for XLP, as it has the potential to yield a return of up to 10%.

The consumer staples sector is resilient in the face of economic uncertainty and offers a hedge for investors during volatile markets. The XLP is expensive at 22x PE with 7% EPS growth for PEG ratio of 2.9x vs 1.5x for the S&P 500. With low growth, high valuations, and few positive catalysts, this ETF may underperform the market benchmarks.