Flows in Consumer Staples ETFs Return on Financial Uncertainty | | So Good News
Investors are returning to consumer ETFs, a tried and true way to invest in uncertain economic times.
The Invesco S&P 500® Equal Weight Consumer Staples ETF stock price history saw $202 million in total revenue year to date. After seeing outflows between September 1 and October 13, the flow reversed, and the fund received $24 million in inflows between October 14 and October 28, according to VettaFi.
RHS provides exposure to the consumer finance sector of the US economy in a unique way: The fund tracks equity weights, meaning that the companies it owns shares receive roughly equal distributions. This results in exposure that is more appropriate than other methods.
“The share of the market’s heaviest stocks is highly concentrated, with about 45% tied to just four stocks. The same weighting method limits the risk of the company, “said Todd Rosenbluth, head of research at VettaFi. “Given the current financial uncertainty, advisors are focusing on hedging strategies to be able to participate in the results but with little protection.”
Rosenbluth points to Procter & Gamble Company ( PG ), PepsiCo Inc ( PEP ), Coca-Cola Company ( KO ), and Costco Wholesale Corporation ( COST ), which dominate ETFs that are heavily weighted.
The consumer’s needs are considered as part of the defense. This category includes essential consumer goods, including food and beverages, household goods, toiletries, alcohol and tobacco. Consumer necessities are things that people can’t—or don’t want—to take out of their budgets regardless of a person’s wealth and current economy.
This sector is not circular, meaning it cannot be linked to businesses. The demand for basic consumer goods has historically remained unchanged regardless of price fluctuations.
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