What are you expecting this summer? Lots of hot and humid days? Time spent working in your garden? Maybe you’re expecting a stock market pullback, or a recession. After all, the stock market has been soaring for much of the last decade, and may be due for a breather this year or next.
If you’re anticipating an economic slowdown in the relatively near future, consider investing in the Vanguard Consumer Staples Index Fund ETF (NYSEMKT: VDC) — because consumer staples are items that we tend to need to buy no matter what the economy is doing.
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Meet the Vanguard Consumer Staples Index Fund ETF
The Vanguard Consumer Staples Index Fund ETF is an index fund that tracks the MSCI US Investable Market Consumer Staples 25/50 index, focused on, of course, consumer staples specialists.
It’s also an exchange-traded fund (ETF) — a fund that trades like a stock, meaning that you can place an order to buy or sell as many shares as you’d like via any good brokerage — at any time during the trading day. (Mutual funds generally handle their inflows and outflows once a day.)
One excellent feature of the Vanguard Consumer Staples Index Fund ETF is its low expense ratio (annual fee). It’s just 0.09%, meaning you’ll have to cough up only $9 for every $10,000 you have invested in the fund.
Here’s how the ETF has performed:
Over the Last… | Average Annual Return |
|---|---|
One year | 5.4% |
Three years | 8.69% |
Five years | 6.83% |
Ten years | 9.84% |
Data source: Morningstar.com, as of May 28.
The ETF contains about 104 stocks. Here are its recent top 10 holdings, which together make up a hefty 65% of the fund’s value:
Company | Recent Weighting in the ETF |
|---|---|
Walmart | 16.15% |
Costco Wholesale | 12.26% |
Procter & Gamble | 9.12% |
Coca-Cola | 8.34% |
PepsiCo | 4.53% |
Philip Morris International | 4.16% |
Altria Group | 3.92% |
Mondelez International | 2.59% |
Colgate-Palmolive | 2.15% |
Target | 1.99% |
Data source: Morningstar.com, as of May 28.
Why buy this ETF?
If you’re thinking that you don’t love that the top 10 holdings make up two-thirds of the fund’s value, that’s fair. You might invest instead in the Invesco S&P 500 Equal Weight Consumer Staples ETF — which holds about 36 consumer staples companies in roughly equal proportion. But its returns are considerably lower than those of the Vanguard ETF.
