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Should You Invest in the Vanguard Consumer Staples ETF (VDC)?

Sector ETF report for VDC

By
This story originally appeared on Zacks

Designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market, the Vanguard Consumer Staples ETF (VDC) is a passively managed exchange traded fund launched on 01/26/2004.

- Zacks

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options 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 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Vanguard. It has amassed assets over $5.87 billion, making it one of the largest ETFs attempting to match the performance of the Consumer Staples - Broad segment of the equity market. VDC seeks to match the performance of the MSCI US Investable Market Consumer Staples 25/50 Index before fees and expenses.

The MSCI US Investable Market Consumer Staples 25/50 Index measures the investment return of stocks in the consumer staples sector.

Costs

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 0.10%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.50%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 100% of the portfolio.

Looking at individual holdings, Procter & Gamble Co. (PG) accounts for about 13.38% of total assets, followed by Walmart Inc. (WMT) and Coca-Cola Co. (KO).

The top 10 holdings account for about 59.17% of total assets under management.

Performance and Risk

The ETF has gained about 8.68% so far this year and is up roughly 12.96% in the last one year (as of 10/22/2021). In that past 52-week period, it has traded between $159.52 and $189.21.

The ETF has a beta of 0.65 and standard deviation of 18.67% for the trailing three-year period, making it a medium risk choice in the space. With about 99 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard 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, VDC is a good 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.

Fidelity MSCI Consumer Staples Index ETF (FSTA) tracks MSCI USA IMI Consumer Staples Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Fidelity MSCI Consumer Staples Index ETF has $819.15 million in assets, Consumer Staples Select Sector SPDR ETF has $11.59 billion. FSTA has an expense ratio of 0.08% and XLP charges 0.12%.

Bottom Line

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 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

 

Vanguard Consumer Staples ETF (VDC): ETF Research Reports

 

CocaCola Company The (KO): Free Stock Analysis Report

 

Procter & Gamble Company The (PG): Free Stock Analysis Report

 

Walmart Inc. (WMT): Free Stock Analysis Report

 

Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports

 

Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports

 

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Zacks Investment Research