Wide Net or Narrow Bet: Choosing Your Staples Exposure
Key Points
FTXG charges a significantly higher expense ratio but offers a slightly higher dividend yield than VDC
VDC has outperformed over the past year and five years, with a smaller maximum drawdown and greater asset scale
FTXG holds a more concentrated portfolio with a distinct tilt toward food and beverage companies versus VDC's broad consumer staples exposure
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The Vanguard Consumer Staples ETF (NYSEMKT:VDC) and the First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) both target the consumer staples sector, but their approaches and results diverge.
While VDC tracks a broad, passive benchmark of nondiscretionary consumer stocks, FTXG narrows its focus to food and beverage companies through a rules-based strategy.
This comparison breaks down their costs, risk, performance, and portfolios to help investors weigh which may fit their needs.
Snapshot (cost & size)
| Metric | VDC | FTXG |
|---|---|---|
| Issuer | Vanguard | First Trust |
| Expense ratio | 0.09% | 0.60% |
| 1-yr return | 2.2% | -7.1% |
| Dividend yield | 2.15% | 2.7% |
| Beta | 0.69 | 0.58 |
| AUM | $7.8 billion | $20.7 million |
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.
FTXG charges a higher expense ratio at 0.60% compared to VDC's 0.09%, but it offers a slightly higher dividend yield of 2.7% versus 2.1%, which could appeal to those seeking more income despite the added cost.
Performance & risk comparison
| Metric | VDC | FTXG |
|---|---|---|
| Max drawdown (5 y) | (16.55%) | (21.69%) |
| Growth of $1,000 over 5 years | $1,022 | $928 |
What's inside
FTXG, launched over nine years ago, concentrates on just 31 holdings in the U.S. food and beverage industry. Its largest allocations are to Archer-Daniels-Midland Company (NYSE:ADM), Mondelez International, Inc. (NASDAQ:MDLZ), and PepsiCo, Inc. (NASDAQ:PEP), collectively making up close to 24% of assets. This narrower, rules-based approach results in a distinct tilt toward food production and distribution, with minor exposure to basic materials and industrials.
VDC, in contrast, tracks a broad consumer staples index with 103 holdings that span household products, food, and retail. Its top positions—Walmart Inc (NASDAQ:WMT), Costco Wholesale Corp (NASDAQ:COST), and Procter & Gamble Co. (NYSE:PG)—cover a wider range of nondiscretionary goods. VDC's sector exposure is almost entirely consumer defensive, making it a more diversified core holding for those seeking stability across the staples landscape.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The core question with these two funds isn't which one is better — it's whether you want a wide net or a narrow one. For investors whose portfolios are built around broad index funds, consumer staples is already an afterthought; the sector makes up roughly 5% of the S&P 500, which means names like Tyson, Conagra, and Kraft Heinz are essentially invisible in a typical portfolio. Either fund meaningfully fills that gap if you want more weight there. VDC gives you the full staples playbook — food, beverages, household products, and retail — at a rock-bottom 0.09% expense ratio. FTXG makes a narrower bet, concentrating on 30 food and beverage names with no P&G, no Costco, no Walmart. PepsiCo, ADM, and Mondelez alone account for nearly a quarter of the fund. The cost gap is real — 0.60% versus 0.09% adds up — and FTXG's slightly higher yield doesn't close it. With a fund this concentrated and this expensive, performance isn't a bonus — it's the whole justification, and worth checking regularly. As with any addition to a portfolio, the right answer depends on what you already own and how much staples exposure you actually want.
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Seena Hassouna has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.
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