FSTA vs. FTXG: How These Popular Consumer Staples ETFs Stack Up for Investors

Both the Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) and the First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) target the defensive side of the U.S. stock market, but they approach it differently: FTXG zeroes in on food and beverage stocks, while FSTA tracks a broad consumer staples benchmark.

This comparison unpacks cost, returns, risk, sector tilt, and portfolio construction to help investors determine which may align better with their goals.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

FSTA is dramatically more affordable in terms of fees, charging a much lower expense ratio. FTXG, however, pays a higher dividend yield, which may appeal to income-focused investors.

Performance & risk comparison

What's inside

FSTA is designed to mirror the MSCI USA IMI Consumer Staples 25/50 Index and casts a wide net with 96 holdings, making it broadly diversified within consumer staples.

Its portfolio is heavily weighted toward household names such as Costco Wholesale, Walmart, and Procter & Gamble, with these three stocks making up nearly 37% of assets. With over 12 years of history, FSTA currently allocates 98% to consumer defensive stocks and maintains a very small presence in consumer cyclical.

FTXG, by contrast, targets the Nasdaq US Smart Food & Beverage Index and is far more concentrated, with just 30 holdings. Its top stocks — Archer-Daniels-Midland, PepsiCo, and Mondelez International — account for over 23% of assets. There are no notable quirks or extra screens in either fund.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

Consumer staples stocks can be smart buys for investors seeking relative safety and stability. This market segment is generally less affected by economic turbulence compared to some other industries, and a consumer defensive ETF can be a simple and straightforward way to buy into this sector.

FSTA is the broader of the two funds, with more than three times as many stocks as FTXG. It also covers a wider swath of the consumer staples market, including stocks across various subsectors.

FTXG is a narrower fund, only containing stocks from the food and beverage subsector. While that results in less diversification, a more targeted approach can sometimes deliver higher returns because lower-performing stocks are less likely to dilute the fund’s earnings.

Over the last five years, FSTA has delivered higher total returns while experiencing lower volatility, with a shallower maximum drawdown. FSTA also boasts a much lower expense ratio, which can help investors save money on fees.

Neither ETF is necessarily better than the other, as they simply take different approaches to the consumer staples sector. If you’re looking for more diversification, FSTA’s broader portfolio could be an advantage. On the other hand, FTXG’s narrower focus can help investors zero in on a highly specific segment of the market.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.