Consumer Staples ETFs: Is VDC or XLP the Better Investment Right Now? Here's What You Need to Know
Key Points
VDC holds a more diversified portfolio with over 100 stocks, while XLP is more concentrated with 35 holdings.
XLP offers a slightly higher dividend yield, but VDC has delivered stronger total returns over the past year.
Both funds have nearly identical expense ratios and remain highly liquid with low trading friction.
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The State Street Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) and the Vanguard Consumer Staples ETF (NYSEMKT:VDC) both track the U.S. consumer staples sector, providing exposure to companies that produce everyday products considered essential.
This comparison highlights their subtle differences in structure, performance, and portfolio makeup, helping investors weigh which may better suit their risk tolerance and investment goals.
Snapshot (cost & size)
| Metric | XLP | VDC |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Expense ratio | 0.08% | 0.09% |
| One-year return (as of April 2, 2026) | 2.35% | 4.13% |
| Dividend yield | 2.38% | 1.95% |
| Beta (5Y monthly) | 0.59 | 0.63 |
| Assets under management (AUM) | $17.6 billion | $9.9 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The one-year return represents total return over the trailing 12 months.
Expense ratios are nearly indistinguishable, with XLP slightly more affordable. XLP also offers a slightly higher dividend yield, which may appeal to income-focused investors.
Performance & risk comparison
| Metric | XLP | VDC |
|---|---|---|
| Max drawdown (five years) | -16.32% | -16.56% |
| Growth of $1,000 over five years (total returns) | $1,366 | $1,419 |
Both funds have experienced similar maximum drawdowns over the past five years, suggesting comparable risk profiles. However, VDC has earned slightly higher five-year total returns than XLP.
What's inside
VDC casts a wider net, holding 104 stocks across the consumer defensive sector (98%), with a minor allocation to consumer cyclical companies. Its top holdings include Walmart, Costco Wholesale, and Procter & Gamble. The fund has a track record of more than 22 years.
XLP, by contrast, is more concentrated with just 35 holdings, entirely in consumer defensive names. Its largest positions closely mirror those of VDC, but XLP’s narrower focus may make it more sensitive to price swings. Neither fund includes leverage, foreign exchange hedging, or notable quirks.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
While both VDC and XLP track the same sectors and contain similar holdings, VDC offers broader exposure to consumer defensive stocks with roughly three times as many holdings as XLP.
In some cases, greater diversification can help limit risk, as a broader basket of stocks reduces the chances that a single company can significantly sway the ETF’s overall performance.
That said, VDC also leans more heavily into its top holdings. While the two funds share the same top three stocks, those companies make up 36.35% of VDC’s portfolio compared to 28.34% for XLP.
In other words, while VDC offers exposure to more stocks within the consumer defensive space, it also has a heavier focus on large industry leaders. Investors seeking access to a greater variety of stocks may prefer VDC’s broad approach. But if VDC’s top three stocks over- or underperform going forward, it could affect its returns more significantly than it would XLP.
Where XLP shines is its higher dividend yield. A higher yield means investors can earn more in passive dividend income over time, giving this ETF an edge for investors seeking stable long-term earnings.
Both funds offer low costs, high liquidity, and similar risk profiles, making either a reasonable choice for exposure to essential U.S. consumer companies.
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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.
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