State Street’s Consumer Staples Select Sector SPDR ETF (XLP) and Vanguard’s Consumer Staples ETF (VDC) are both popular options for those seeking stability in volatile markets. While they serve a similar purpose, XLP tends to have lower fees and better yields, whereas VDC offers broader diversification with more holdings.
Investors often flock to consumer staples for essentials like food and personal care items. These funds are commonly part of low-volatility portfolios, helping to mitigate risk during turbulent market times.
Cost and Size Overview
| Metric | VDC | XLP |
|---|---|---|
| Publisher | Vanguard | SPDR |
| Expense Ratio | 0.09% | 0.08% |
| 1-Year Return (As of June 19, 2026) | 6.38% | 6.43% |
| Dividend Yield | 2.15% | 2.62% |
| Beta (5 Years) | 0.55 | 0.54 |
| Assets Under Management (AUM) | $9.1 billion | $14.9 billion |
Beta indicates how the price volatility compares to the S&P 500, derived from monthly returns over five years. The one-year return reflects total returns over the next year, while the dividend yield represents the trailing twelve months’ distribution.
XLP’s expense ratio of 0.08% makes it slightly more cost-effective than VDC. Additionally, XLP’s higher dividend yield could be more appealing to investors focused on income.
Performance and Risk Assessment
| Metric | VDC | XLP |
|---|---|---|
| Maximum Drawdown (5 Years) | (16.56%) | (16.32%) |
| $1,000 Growth in 5 Years (Total Return) | $1,421 | $1,381 |
Composition Breakdown
Founded in 1998, XLP focuses on U.S. companies within the S&P 500, especially those in retail and manufacturing. It has a focused portfolio of just 35 stocks, with Walmart (10.8%), Costco Wholesale (9.1%), and Procter & Gamble (7.1%) leading the way.
On the flip side, VDC, established in 2004, tracks a diverse array of benchmarks from the consumer staples sector and boasts 103 holdings. Its top three companies are the same as XLP: Walmart (14.5%), Costco Wholesale (11.8%), and Procter & Gamble (8.7%).
Investor Implications
Deciding between XLP and VDC really hinges on whether you’re after concentration or diversification.
XLP’s concentrated portfolio means it heavily relies on big names like Walmart and Costco, which together make up 27% of its investments. That’s not necessarily a downside—these companies are known for steady cash flow and long-standing dividends. For those prioritizing income, XLP’s slight edge in yield and lower fees could make it attractive.
Meanwhile, VDC offers a broader approach. With nearly three times as many stocks, it includes many mid-tier companies, providing a deeper exposure to the consumer staples arena. This might suit investors wary of putting too much weight on a few major retailers, especially when larger companies face challenges.
Historically, consumer staples tend to fare better than the overall market during economic downturns. Both funds have similar betas around 0.55, exhibiting less price movement than the S&P 500. This stability is often appealing for long-term investors looking to include staples in their portfolios.
At the end of the day, neither option is inherently better. If cost and income generation are your focus, XLP is slightly more favorable. But if you’re after a wider sector coverage, VDC might be the better pick.
