3 Unique and Dominant Consumer Staples ETF Plays

March 17, 2025 at 07:45 AM EDT

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Investors seeking defensive exposure beyond a broad-based consumer staples exchange-traded fund (ETF) might look to a number of unique funds nonetheless notable for their recent performance. Consumer staples companies appeal to investors when recession fears mount for their supposed resilience in the face of difficult economic conditions.

While this does not necessarily mean these companies will be likely rally candidates—the benchmark Consumer Staples Select Sector SPDR Fund (NYSEARCA: XLP) has only returned 1.7% year-to-date (YTD) and 4.9% year-over-year (YoY)—it may suggest that they offer some protection compared with riskier bets that may lose ground in these scenarios.

Targeting E-Commerce

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For an uncommon long/short strategy in which both long and short positions are combined in the same fund, investors might consider the ProShares Long Online/Short Stores ETF (NYSEARCA: CLIX). As the name suggests, CLIX takes a 100% long position in retail companies primarily doing business online—think e-commerce giants like eBay Inc. (NASDAQ: EBAY) and Chinese firm PDD Holdings Inc. (NASDAQ: PDD). Interestingly, it also takes a 50% short position in more traditional retailers that rely primarily on brick-and-mortar store locations. Many of these latter companies are ultra-low-cost retail outfits like Dollar Tree Inc. (NASDAQ: DLTR).

CLIX is predicated on the assumption that the dominance of e-commerce (and the related decline of in-store shopping) will continue into the future. Not only does it bet that the former will see share price increases, it also simultaneously bets on the latter dropping in price. For many in-person retail stores, mounting costs associated with real estate and inventory, difficulties with supply chains, and lack of foot traffic have worn down margins lowered return on assets over an extended period.

The long/short combo comes at a cost, with the ETF holding an annual fee of 0.65% of invested assets. It may also be difficult for investors to determine how it is likely to perform on a given day because of its complex construction. Still, the long and short positions may provide some buffer against extreme movement in the consumer staples sector if these parts of the portfolio happen to cancel each other out—a potential benefit in times of increasing uncertainty. CLIX has returned 2.8% YTD as of March 12.

Targeting Emerging Markets

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The Columbia Research Enhanced Emerging Economies ETF (NYSEARCA: ECON) is not a pure-play consumer staples fund—indeed, its portfolio is distributed across many sectors—but it does have a focus on "consumer"-facing companies.

Chinese retailers represent many of the top positions in the basket, which targets securities exhibiting favorable characteristics in a bid to outperform the broader EM securities universe. But with more than 200 positions, ECON also includes representation from Taiwan, India, South Korea, Brazil, and many other countries.

ECON is off to a fairly strong start for the year, with a return of 4.5% YTD as of March 12, 2025. With the breadth of its strategy and the opportunity to access unique names from many nations traditionally underrepresented in investment portfolios, investors should expect to pay a moderately high expense ratio of 0.49%.

Targeting the Global Consumer Staples Sector

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Investors feeling fairly bullish on the largest U.S. consumer staples companies but looking to diversify their exposure through access to companies in the same sector from the U.K., Switzerland, Japan, France, and a range of other developed nations might look to the iShares Global Consumer Staples ETF (NYSEARCA: KXI). With just under 100 holdings, KXI offers relatively focused exposure to consumer staples companies but nonetheless provides a global perspective.

About 60% of holdings as of March 11, 2025 are in U.S. stocks, with U.K. firms making up the next-largest portion. Food, beverage, and tobacco companies occupy about half of the portfolio, with a range of other consumer staples names making up the rest. Within a fairly small portfolio, KXI does aim for diversification—however, there are more broadly diversified pure-play consumer staples funds available for investors looking to maximize distribution in this regard.

KXI is the cheapest of the funds on our list, with an expense ratio of 0.41%, and it has also outperformed the S&P 500 this year. KXI's YTD return as of March 12 is 5.8%, the highest on our list at this point in the year.

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3 Unique and Dominant Consumer Staples ETF Plays

Targeting E-Commerce

Targeting Emerging Markets

Targeting the Global Consumer Staples Sector

Where Should You Invest $1,000 Right Now?

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