Which Consumer Staples ETF Is the Better Buy: Fidelity's FSTA or iShares' IYK?

The Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) offers a much lower expense ratio than the iShares U.S. Consumer Staples ETF (NYSEMKT:IYK), while both funds manage approximately $1.4 billion in assets under management (AUM).

Investors seeking defensive exposure often turn to the consumer staples sector for stability. Both FSTA and IYK target American companies that produce essential goods, but they differ in fee structure, diversification, and specific sub-sector weights.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The one-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Fidelity fund is notably more affordable, with an expense ratio of 0.08% compared to 0.38% for the iShares fund. This cost advantage is paired with a slightly lower trailing-12-month dividend yield.

Performance & risk comparison

What's inside

Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) targets a broad index of consumer staples stocks. Its sector allocation is 97% consumer defensive, 1% consumer cyclical, and 1% cash and others. It holds 104 stocks, and its largest positions include Walmart (NASDAQ:WMT) at 13.51%, Costco (NASDAQ:COST) at 11.38%, and Coca Cola Co. (NYSE:KO) at 8.42%. It was launched in 2013. Fidelity MSCI Consumer Staples Index ETF has paid $1.16 per share over the trailing 12 months, which on its recent ~$53.91 share price works out to a 2.2% yield.

The iShares U.S. Consumer Staples ETF (NYSEMKT:IYK) follows a narrower benchmark. The fund allocates 83% to consumer defensive, 13% to healthcare, and 3% to basic materials. It holds 53 stocks, and its top holdings include Coca-Cola at 12.84%, Procter & Gamble (NYSE:PG) at 12.59%, and Philip Morris International (NYSE:PM) at 11.51%. It was launched in 2000. iShares U.S. Consumer Staples ETF has paid $1.90 per share over the trailing 12 months, which on its recent ~$75.34 share price works out to a 2.5% yield.

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What this means for investors

Consumer staples stocks earn their defensive reputation in moments like this one. When markets turn volatile and investors grow cautious, the companies selling groceries, household products, and everyday essentials tend to hold up better than most. Both FSTA and IYK give investors exposure to that stability, but they build their portfolios differently.

FSTA is a pure consumer staples fund, anchored by Costco, Walmart, and Procter & Gamble. That retail-heavy tilt has delivered stronger returns than IYK over the past year and over five years, at a cost roughly five times lower. IYK takes a slightly broader approach, blending consumer staples with a modest allocation to healthcare and basic materials companies. That diversification beyond pure staples gives it a higher yield but has not translated into better long-term performance.

For most long-term investors, FSTA's lower cost, stronger historical returns, and purer sector focus make it the more practical choice. IYK appeals to those who specifically want a blend of consumer defensive names alongside a small healthcare allocation and are comfortable paying more for that combination.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.