Investors seeking exposure to the consumer staples sector can choose between XLP and RSPS, two ETFs with distinct cost structures, risk profiles, and earnings characteristics. This analysis examines key metrics to guide income-oriented and defensive investment decisions.
- XLP has a 0.10% expense ratio; RSPS charges 0.35%
- XLP's 3-year volatility is 11.7%; RSPS is 13.2%
- XLP yield: 3.1%; RSPS yield: 2.7%
- XLP 5-year annualized return: 10.4%; RSPS: 9.8%
- XLP fell 4.2% in 2022 correction; RSPS fell 5.7%
- Both funds offer defensive exposure with steady dividend payouts
XLP and RSPS are two prominent exchange-traded funds offering exposure to the consumer staples sector, a defensive segment known for consistent demand and steady dividend payouts. XLP, managed by SPDR, tracks the S&P Consumer Staples Select Sector Index and holds large-cap industry leaders such as Procter & Gamble, PepsiCo, and Coca-Cola. RSPS, offered by Invesco, follows the S&P 500 Equal Weight Consumer Staples Index, providing a more balanced approach across the sector by weighting each constituent equally, including smaller players like Altria and Kimberly-Clark. The cost difference is significant: XLP has an expense ratio of 0.10%, while RSPS charges 0.35%, nearly 3.5 times higher. This cost disparity may impact long-term returns, especially for investors with large positions. In terms of risk, XLP exhibits lower volatility, with a 3-year annualized standard deviation of 11.7%, compared to RSPS's 13.2%, suggesting XLP is better suited for risk-averse investors. RSPS's higher volatility stems from its equal-weighting model, which increases exposure to smaller, more volatile stocks. Earnings performance shows XLP outpacing RSPS in both yield and growth. As of the latest data, XLP offers a trailing 12-month dividend yield of 3.1%, while RSPS yields 2.7%. Additionally, XLP's average annualized total return over the past five years is 10.4%, slightly ahead of RSPS's 9.8%. The sector's defensive nature has helped both funds maintain positive returns during market downturns, with XLP down just 4.2% in the 2022 correction versus RSPS's 5.7% decline. Investors focused on cost efficiency, stability, and high yield may favor XLP, while those seeking broader sector diversification and potential outperformance from smaller-cap names may consider RSPS, despite the higher fees and volatility. Both funds remain strong candidates for income-focused portfolios in a rising rate environment.