XLP Delivers Pure-Play Staples While IYK Adds Healthcare. Which Strategy Wins?
Key Points
IYK charges a higher expense ratio and holds more stocks than XLP.
IYK delivered a slightly stronger 1-year total return with a similar dividend yield.
XLP remains more concentrated in consumer defensive stocks, while IYK mixes in healthcare and basic materials.
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The State Street Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) and the iShares US Consumer Staples ETF (NYSEMKT:IYK) both target the U.S. consumer staples sector, but IYK charges higher fees, holds more positions, and includes a modest allocation to healthcare stocks.
Both the State Street Consumer Staples Select Sector SPDR ETF and the iShares US Consumer Staples ETF offer exposure to U.S. consumer staples companies, appealing to investors seeking defensive sector stability. This comparison examines how the two funds stack up on costs, returns, portfolio makeup, and risk, helping investors decide which approach may better fit their needs.
Snapshot (cost & size)
| Metric | XLP | IYK |
|---|---|---|
| Issuer | SPDR | IShares |
| Expense ratio | 0.08% | 0.38% |
| 1-yr return (as of 2026-02-02) | 9.9% | 11.3% |
| Dividend yield | 2.75% | 2.75% |
| AUM | $14.7 billion | $1.2 billion |
The 1-yr return represents total return over the trailing 12 months.
While both funds offer similar dividend yields, XLP is more affordable with a 0.08% expense ratio versus IYK’s 0.38%, which could matter for long-term cost-conscious investors.
Performance & risk comparison
| Metric | XLP | IYK |
|---|---|---|
| Max drawdown (5 y) | (16.31%) | (15.04%) |
| Growth of $1,000 over 5 years | $1,302 | $1,222 |
What's inside
IYK tracks a broader set of companies, with 54 holdings spanning consumer defensive (85%), healthcare (11%), and basic materials (2%). Its largest weights are in Procter & Gamble (NYSE:PG) at 14.25%, Coca-Cola (NYSE:KO) at 11.70%, and Philip Morris International (NYSE:PM) at 11.31%. The fund’s 25.6-year history suggests long-term stability, though the inclusion of healthcare stocks introduces a small tilt outside pure consumer staples exposure.
XLP, by contrast, keeps a pure-play focus on the consumer defensive sector with 100% exposure. Its portfolio of 36 stocks is anchored by Walmart (NASDAQ:WMT), Costco Wholesale (NASDAQ:COST), and Procter & Gamble (NYSE:PG). This tighter focus may appeal to investors seeking targeted, sector-specific exposure without healthcare or materials stocks in the mix.
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What this means for investors
Consumer staples, the everyday essentials like food, household products, and beverages, hold their value during economic turmoil because demand stays steady regardless of market conditions. Both IYK and XLP provide defensive exposure to this sector, but XLP offers purer focus while IYK blends in some diversification.
XLP is a pure-play consumer staples ETF that’s anchored by retail giants Walmart and Costco as its top holdings, alongside packaged goods producers like Procter & Gamble and Coca-Cola. It's a concentrated fund tracking just the consumer staples companies within the S&P 500 at rock-bottom cost. IYK casts a wider net, allocating most assets to consumer staples but adding healthcare names and basic materials. Its top holdings lean toward product manufacturers rather than retailers, and it charges significantly higher fees for this broader approach. Both ETFs delivered modest gains in 2025.
XLP is a good choice for investors wanting pure, low-cost consumer staples exposure who believe Walmart and Costco's retail dominance provides stronger potential for long-term returns. IYK is a better fit for those looking for portfolio diversification beyond pure consumer staples stocks and want healthcare exposure as an additional defensive layer. Just understand you're paying nearly five times the fee for that broader approach. For most defensive investors, XLP's cost efficiency and retail anchor make it the stronger choice.
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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.
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