4 ETFs With Surprising Conservative Sector Allocations
Today is one of those days where, all of a sudden, conservative plays look very attractive. When it comes to ETFs, "conservative" often means dabbling in the consumer staples arena and that often means a visit to the Consumer Staples Select Sector SPDR (NYSE: XLP). Or it could mean investing in health care and utilities stocks.
Heavy on the usual suspects of the staples world XLP is a boring ETF with a beta of just 0.55%. Then again, boring can be beautiful as staples, utilities and health care stocks and ETFs proved last year.
Today's glum market action got us thinking about ETFs that might not indicate it, but do have surprisingly high allocations to the staples and that might offer higher returns than XLP with a little bit more risk. It took some time, but we found some compelling options.
EGShares India Consumer ETF (NYSE: INCO) The name of this ETF is kind of sneaky in that it leaves one wondering if this is a staples or discretionary ETF. INCO is a mix of both, but when combing the fund's allocations to personal products, food producers, beverage and tobacco names, the number is over 54% of INCO's weight meaning this is a majority staples fund. That might explain why INCO is hardly changed today while other emerging markets ETFs are getting hammered.
Global X China Consumer ETF (NYSE: CHIQ) This is another one where the fund's name leaves investors wondering exactly what's under the hood. Undoubtedly, CHIQ is a great way to play the fundamental story surrounding the Chinese consumer. That includes the Chinese consumer spending on things they need (staples) in addition to discretionary items.
CHIQ covers both bases as food, household goods, health care, beverages and farming names represent about 43% of the fund's weight. CHIQ also features an almost 22% allocation to consumer services names and there are some staples names under that umbrella, so this is a stealthy staples fund to be sure.
iShares MSCI New Zealand Investable Market Index Fund (NYSE: ENZL) The first thought many investors might have about New Zealand is that the country is commodities play with backdoor emerging markets kicker. That's not wrong, but the iShares MSCI New Zealand Investable Market Index Fund is surprisingly conservative in its sector allocations. At almost 20%, telecom names are the heaviest weight in this ETF. Beyond that, utilities and health care names combine for another 20%.
iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW) EWW is a prime example of an ETF whose volatility belies a rather conservative sector mix. Staples and telecom names combine for 53% of the fund's weight and that might be one more point in the ETF's favor.
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