Shopping for Portfolio Security? The iShares Consumer Staples ETF (IYK) Outperforms Invesco Food & Beverage (PBJ) in Cost, Yield, and Performance

Investors comparing iShares U.S. Consumer Staples ETF (NYSEMKT:IYK) and Invesco Food & Beverage ETF (NYSEMKT:PBJ) may find that IYK offers broader sector diversification and lower costs, while PBJ provides concentrated exposure to the food and beverage industry.

Both funds offer defensive exposure to American markets by tracking consumer-focused companies. While the Invesco fund narrows its lens to the food and beverage industry, the iShares fund takes a broader approach to the consumer staples sector, including household products and tobacco.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

iShares U.S. Consumer Staples ETF is the more affordable option with a 0.38% expense ratio compared to 0.61% for PBJ. This comparison also highlights a significant yield gap, as IYK offers a higher payout.

Performance & risk comparison

What's inside

iShares U.S. Consumer Staples ETF provides broad exposure to the staples sector with 53 holdings. Its portfolio leans heavily toward consumer defensive stocks at 83%, followed by healthcare at 13% and basic materials at 3%. Its largest positions include Procter & Gamble at 13.4%, Coca-Cola at 12.5%, and Philip Morris International at 11%. 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 ~$73.11 share price works out to a 2.50% yield.

Invesco Food & Beverage ETF tracks the Dynamic Food & Beverage Intellidex Index, holding 31 equities. It allocates 70% to consumer defensive stocks, 8% to industrials, and 8% to consumer cyclical companies. Its largest positions include Monster Beverage at 5.6%, Corteva at 5.34%, and Archer-Daniels-Midland at 5.3%. It was launched in 2005. Invesco Food & Beverage ETF has paid $0.61 per share over the trailing 12 months, which on its recent ~$47.92 share price works out to a 1.30% yield.

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What this means for investors

After a huge tech-fueled run-up in the stock market, it makes sense for investors to seek some less exciting, more defensive positions for their portfolios. The consumer staples sector can be a great place to park some cash if you’re looking for modest capital appreciation and income generation that can withstand economic fluctuations.

The choice between the IYK and PBJ ETFs may come down to which segment of the consumer staples sector you want to hold. IYK is a broader bet, with more holdings, more assets under management, and exposure to household products and tobacco in addition to food and beverage companies. The aptly named PBJ ETF, on the other hand, narrows its focus to a food and beverage index, with a focus on companies that are further back in the food supply chain. Two of its top holdings, Corteva and Archer-Daniels-Midland, are agriculture and food processing companies, respectively, rather than retail brands.

Both can face obvious risks: Consumer spending habits and brand preferences can fluctuate, and tariffs and energy costs can weigh on manufacturing and distribution.

IYK offers a higher dividend yield for a lower expense ratio, and its larger portfolio gives it both diversification and liquidity. For most retail investors, I think it’s the more compelling option in this matchup.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monster Beverage. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.