Investors have added over $3.3 billion into Consumer Staples ETFs this year as they seek safe harbor amid rising economic uncertainties and boiling geopolitical tensions between Russia and the West. In this global inflationary environment, consumer staples can usually weather the storm since the demand for staples are inelastic and that gives these companies higher pricing power as they are able to increase their prices with inflation better than other industries. They also exhibit less market sensitivity and lower overall volatility.
Investing in America-domiciled Consumer Staples ETFsAmong the largest Consumer Staples ETFs available for investors in America are the Consumer Staples Select Sector SPDR Fund (XLP), Vanguard Consumer Staples ETF (VDC), iShares Global Consumer Staples ETF (KXI), Fidelity MSCI Consumer Staples Index ETF (FSTA), and iShares U.S. Consumer Staples ETF (IYK).
XLP alone received $2.25 billion this year. The fund tracks the Consumer Staples Select Sector Index and provides exposure to S&P 500 consumer staples companies. In terms of industry exposure, Beverages has the highest weight (24.68%), followed by Household Products (24.24%), Food & Staples Retailing (19.3%), Food Products (18.16%), Tobacco (10.15%), and Personal Products (3.48%). The fund's leading names are Procter & Gamble (16.56%), Coca-Cola Company (10.4%), PepsiCo Inc. (9.92%), Costco Wholesale (9.69%), and Philip Morris International (5.43%).
The fund has an expense ratio of 0.1% and trades primarily on NYSE ARCA Exchange. Despite the notable inflows this year, XLP's price slightly dipped by -1.5%.
Tomorrow's treatments ETFs have witnessed outflows of -$255 million this year as investors avoid high growth high-risk sectors amid looming interest rate hikes. "Tomorrow's treatments" is an investment theme that focuses on ETFs investing in companies engaged in research and development of cutting-edge treatment, therapy, and drugs to treat common and rare diseases. Last year, investors added $650 million to the theme as innovative COVID-19 vaccines emerged in record time and opened the doors for the funding and development of new treatments. Scientists have already begun exploring the mRNA technology used in Pfizer-BioNTech and Moderna vaccines to create new vaccines and treatments of various diseases such as cancer.
Investing in America-domiciled Tomorrow’s Treatments ETFsWhile tomorrow's treatments have recently gone out of favor, the name of the theme hints at the long-term prospects the investment holds. Investors in America can jump on board the theme through Robo Global Healthcare Technology and Innovation ETF (HTEC), ALPS Medical Breakthroughs ETF (SBIO), and ETFMG Treatments Testing and Advancements ETF (GERM) among others.
The largest of the pack is HTEC with $172 million in assets under management. The fund tracks the ROBO Global Healthcare Technology and Innovation Index and invests in companies engaged in developing breakthrough healthcare technologies vital for tomorrow's treatments. As of February 17th, 2021, the fund's top holdings include Vocera Communications (VCRA, 2.12%), Glaukos Corp. (GKOS, 2.06%), iRythm Technologies (IRTC, 1.84%), Boston Scientific Corp. (BSX, 1.73%), and Integra LifeSciences Holding (IART, 1.67%).
HTEC has a net expense ratio of 0.68% and trades on the New York Stock Exchange. Since its inception on June 25th, 2019, the fund has generated a cumulative return of +18% (as of January 31st, 2022). Meanwhile, HTEC has lost around -20% this year.