Concerns about a possible recession are on the rise, and there may be no better time than now to load up on some defensive stocks. The Consumer Staples Select Sector SPDR Fund (NYSEArca:XLP) is a great way to do just that without having to buy several different stocks.
Among the top holdings in the ETF include Procter & Gamble Co (NYSE:PG), which takes up 16.3% of the portfolio’s weight, followed by Coca-Cola (NYSE:KO) at 11.42% and PepsiCo (NASDAQ:PEP) at 10.36%.
The ETF has produced strong returns this year, rising 20% since January. Those are generally not the types of returns you would expect from an ETF and could be indicative of investors turning to safer stocks at a time when there’s concern that economic conditions may not be getting better. Over the past five years, the ETF has risen more than 30%.
In addition, the fund will also provide investors with a good source of recurring income as it has averaged a yield of 2.6% over the past 12 months. The fund’s expense ratio of 0.13% is also a nominal amount given the amount of diversification that investors can benefit from.
While this ETF may not produce the strongest possible returns for investors, for those that are looking for safety and don’t want to risk investing in stocks that may be more likely to see corrections, it’s a good way to try and make the best of an uncertain situation.
The fund’s beta of 0.63 ensures investors will benefit from a lot more stability than they’d see from the markets.
