Market Overview

3 Staples ETFs For The Month Of May

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3 Staples ETFs For The Month Of May
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May has a bad reputation in terms of equity market performance, but history indicates stocks aren't dreadful in the fifth month year. There are ways for investors to remain long equities as summer kicks off and, not surprisingly, part of that prescription includes defensive, low beta sectors.

As was recently noted in this space, the Consumer Staples Select Sector SPDR (NYSE: XLP), the largest consumer staples exchange traded fund by assets, is one of the best-performing sector SPDR ETFs in the month of May.

Actually, May kicks off a period of strength for the staples and healthcare sectors.

See Also: Sell In May And Go Away?

“For example, the S&P 500 Consumer Staples and Health Care sectors recorded average price gains of 4.4% and 4.6%, resppectively, in the six months ended October (dating back to 1990) and the two sectors also posted higher frequencies of beating the S&P 500 than other sectors during the seasonally weak period,” CFRA Director of ETF & Mutual Fund Research Todd Rosenbluth said in a note out Tuesday. “In addition, the CFRA Stovall seasonal rotation strategy - shifting to more cyclical sectors in the November-April period and toward defensive sectors the rest of the year -- delivered 600 basis points of outperformance using the S&P Equal Weight 500 sectors since 1990, a similar amount for the S&P Global 1200 since 1995, and saw 350 basis points of outperformance for the S&P SmallCap 600 sectors also since 1995.”

Investors looking for a different spin on the staples sector can consider the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (NYSE: RHS). Unlike cap-weighted rivals such as XLP, RHS isn't dominated by the staples sector's biggest names. RHS is trailing XLP on a year-to-date basis, but over the past three years RHS is well ahead of its cap-weighted rivals.

Investors looking for a targeted market cap approach to staples stocks can consider the Elkhorn S&P MidCap Consumer Staples Portfolio (BATS: XS). XS is the only dedicated mid-cap staples ETF on the market and is part of the industry's only suite of mid-cap sector ETFs.

XS “launched at the end of 2016. Beverages companies comprise 3% of recent assets and there are no tobacco companies inside. Rather, 70% of the portfolio is in food product companies,” CFRA said.

CFRA has Overweight ratings on RHS and XLP and a Marketweight rating on XS. XS has generated positive returns since coming to market.

Posted-In: consumer staples StaplesAnalyst Color Long Ideas Sector ETFs Top Stories Trading Ideas ETFs Best of Benzinga

 

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