IYK vs. XLP: How These Consumer Staples ETFs Compare on Risk, Returns, and Fees

The State Street Consumer Staples Select Sector SPDR ETF (XLP +0.50%) and the iShares U.S. Consumer Staples ETF (IYK +0.55%) both aim to track U.S. companies in the consumer staples space, appealing to investors seeking defensive exposure.

This comparison compares these ETFs on cost, yield, performance, holdings, and risk, helping investors determine the right option for their portfolio.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

While these two funds deliver nearly identical dividend yields, XLP is notably more affordable with a 0.08% expense ratio compared to IYK’s 0.38% fee, which could add up over time.

Performance & risk comparison

What’s inside

IYK holds 54 stocks and tracks the broad U.S. consumer staples sector, but with a twist: 85% of assets are in consumer defensive companies, along with roughly 11% in healthcare and 2% in basic materials. The largest positions are Procter & Gamble, Coca-Cola, and Philip Morris International. This broader approach means investors get a touch of healthcare and materials exposure beyond pure staples.

By contrast, XLP is tightly focused on consumer defensive companies, with 100% of assets in the sector. It holds just 35 stocks, and its top holdings are Walmart, Costco Wholesale, and Procter & Gamble, making it a more concentrated play on traditional staples. Both funds avoid leverage, currency hedging, or other structural quirks.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

A consumer defensive ETF can be a smart investment during periods of market uncertainty, as these stocks often provide stability regardless of general economic conditions.

Both IYK and XLP offer concentrated exposure to this sector, but XLP is narrower in terms of its number of holdings and sector allocations. IYK provides slightly more diversification, branching outside of consumer defensive with some healthcare stocks and holding around 20 more stocks than XLP.

Greater diversification can help limit risk. IYK boasts a slightly lower beta and a marginally lower five-year maximum drawdown, suggesting it has experienced lower volatility over the last five years.

Sometimes, though, a more targeted approach can lead to higher total returns. XLP has outperformed IYK in both one- and five-year total returns, which can give it an edge for investors seeking greater earning potential.

Finally, fees are a factor to consider when deciding between these two funds. IYK charges a much higher expense ratio of 0.38% compared to XLP’s 0.08%. In other words, investors will pay $38 in fees per $10,000 invested in IYK, or $8 per $10,000 in XLP. Over time, that difference could amount to thousands of dollars in fees.