Which Popular Consumer Staples ETF Is the Better Buy for Investors?

The Vanguard Consumer Staples ETF (NYSEMKT:VDC) and the Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) both aim to capture the performance of the U.S. consumer staples sector, tracking similar baskets of companies that supply essential, nondiscretionary goods.

This comparison explores their costs, returns, risk, and portfolio makeup to help investors decide which best fits their needs.

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

FSTA is slightly more affordable with a lower expense ratio, and it also pays a marginally higher dividend yield. For cost-conscious or income-focused investors, the difference is modest but present.

FSTA tracks the MSCI USA IMI Consumer Staples 25/50 Index and holds 96 stocks, focusing on consumer defensive companies. Its largest positions are Costco Wholesale, Walmart, and Procter & Gamble, with no significant sector or thematic quirks. The fund’s 12-year history underscores its stability and established presence among sector ETFs.

VDC takes a comparable approach, investing in consumer defensive stocks and spreading its portfolio across 105 holdings. The top stocks are Walmart, Costco Wholesale, and Procter & Gamble, echoing FSTA’s lineup.

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VDC and FSTA are nearly identical in most meaningful ways. They’ve experienced almost exactly the same one- and five-year total returns and maximum drawdowns, signalling very similar performance and levels of volatility.

With the same underlying index and top holdings, the funds also boast remarkably similar portfolios. VDC contains a handful more stocks than FSTA, but again, it hasn’t necessarily translated to a difference in performance or risk profile.

One potentially significant difference is the assets under management (AUM). VDC offers a much larger AUM, providing greater liquidity and making it easier for investors to trade large amounts. While this won’t affect many everyday investors, it’s worth considering given how similar these two ETFs are.

There are also marginal differences in expense ratio and dividend yield, with FSTA boasting a slight advantage on both fronts. Again, these are minor distinctions, but they can have a long-term impact.

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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.

FSTA vs. VDC: Which Popular Consumer Staples ETF Is the Better Buy for Investors? was originally published by The Motley Fool