This ETF Could Be a Perfect Holding if Stocks Crash

Consumer staple stocks have long been valued by investors because of the steady nature of the business. When the economy crashes, folks still buy groceries.

For evidence, all investors need to do is look at the Great Recession. In 2008-09, Canada’s three largest grocery stocks outperformed the market by a large margin as investors flocked to the relative safety of the sector. Certain stocks even went up as the rest of the market was melting down.

Investors can get that kind of stability in their portfolios today with the iShares S&P/TSX Capped Consumer Staples Index Fund (TSX:XST), which offers targeted exposure to Canadian consumer staples companies.

The ETF has a beta of 0.19, making it just 19% as volatile as the rest of the market.

XST is relatively small. It has 1.8 million shares outstanding and a market cap just under $100 million. Approximately 26,000 shares trade hands on an average day, which is plenty of liquidity for regular investors. The fund pays a small dividend; the trailing yield is approximately 0.5%.

The ETF has 13 holdings, which includes separate categories for U.S. and Canadian cash. Top holdings include Alimentation Couche-Tard (24% of assets), Loblaw Companies (21.4% of assets), and Metro Inc. (13.7% of assets). In total, the top five holdings – which also include Saputo and George Weston – make up more than 80% of the fund’s holdings. Retailers make up about 75% of the fund’s assets, while food manufacturers make up the rest.

The fund has a management expense ratio of 0.61%, which is around average for this type of ETF.