Should You Invest in the iShares U.S. Consumer Staples ETF (IYK)?
Sector ETF report for IYK
Looking for broad exposure to the Consumer Staples - Broad segment of the equity market? You should consider the iShares U.S. Consumer Staples ETF (IYK), a passively managed exchange traded fund launched on 06/12/2000.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
The fund is sponsored by Blackrock. It has amassed assets over $686.06 million, making it one of the larger ETFs attempting to match the performance of the Consumer Staples - Broad segment of the equity market. IYK seeks to match the performance of the Dow Jones U.S. Consumer Goods Index before fees and expenses.
The Dow Jones U.S. Consumer Goods Index measures the performance of the consumer goods sector of the U.S. equity market.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.34%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector--about 52.10% of the portfolio. Consumer Discretionary and Telecom round out the top three.
Looking at individual holdings, Tesla Inc (TSLA) accounts for about 15.74% of total assets, followed by Procter & Gamble (PG) and Coca-Cola (KO).
The top 10 holdings account for about 58.85% of total assets under management.
Performance and Risk
So far this year, IYK has added roughly 7.41%, and was up about 21.04% in the last one year (as of 10/20/2021). During this past 52-week period, the fund has traded between $144.79 and $188.40.
The ETF has a beta of 0.91 and standard deviation of 21% for the trailing three-year period, making it a medium risk choice in the space. With about 104 holdings, it effectively diversifies company-specific risk.
IShares U.S. Consumer Staples ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IYK is a sufficient option for those seeking exposure to the Consumer Staples ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $5.84 billion in assets, Consumer Staples Select Sector SPDR ETF has $11.53 billion. VDC has an expense ratio of 0.10% and XLP charges 0.12%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports
CocaCola Company The (KO): Free Stock Analysis Report
Procter & Gamble Company The (PG): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
To read this article on Zacks.com click here.