For investors looking for companies or sectors that can both provide defense during market turmoil, such as the volatility we recently experienced, but also play offense coming out of this recession, there are a few high-quality options investors can consider.
In this article, I’m going to discuss one Exchange Traded Fund (ETF) in the consumer staples sector I think meets these criteria.
The SPDR Consumer Staples Sector ETF Fund (NASDAQ:XLP) is a great place for investors seeking defensive growth to assess. This is a somewhat overlooked sector, and some may say boring.
Buying companies selling toilet paper and baby powder isn’t as exciting as buying that hot new tech name. However, this is a highly insulated way to gain exposure to financial markets at a time when many may be too worried about near-term potential volatility to step in.
For those concerned that this consumer staples ETF is too defensive, and may not benefit from the growth we will undoubtedly see post-recovery, investors out to be aware that approximately half of the ETF’s exposure is to Amazon.com, Inc. (NASDAQ:AMZN).
This ETF, therefore, has understandably continued to show outperformance to the broader stock market, and can be expected to continue this outperformance over the long term so long as the robust secular growth trends driving the North American economy continue on.
This ETF also provides investors, who may be unsure as to which direction the market may be headed in the intermediate term, with a high level of diversification, in addition to the growth that Amazon provides as a heavily-weighted component of the ETF.
Invest wisely, my friends.
