The Vanguard Consumer Staples ETF (VDC) Offers Broader Diversification Than the iShares U.S. Consumer Staples ETF (IYK)

The Vanguard Consumer Staples ETF (NYSEMKT:VDC) and the iShares US Consumer Staples ETF (NYSEMKT:IYK) both aim to capture the performance of leading U.S. consumer staples companies. While their sector focus is similar, differences in cost, diversification, and portfolio tilt may sway investors comparing these two options.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; figures use five-year weekly returns.

VDC is more affordable, with a 0.09% fee (as of 2025-10-27), undercutting IYK by 0.29 percentage points. IYK does offer a slightly higher dividend yield, which may appeal to income-focused investors.

Performance & risk comparison

What's inside

The Vanguard Consumer Staples ETF spans 103 holdings, offering broad coverage of the consumer defensive sector (98%) with a small tilt toward consumer cyclical names. Its largest positions, including Walmart Inc (NYSE:WMT), Costco (NASDAQ:COST), and Procter & Gamble (NYSE:PG), anchor the fund in household staples. With more than 21.8 years of operation and $8.5 billion in assets under management (AUM), it provides diversified exposure and deep liquidity for most investors.

The iShares U.S. Consumer Staples ETF is more concentrated, with 55 holdings and a 10% allocation to healthcare stocks as of 2025-10-28, setting it apart from VDC’s almost pure consumer defensive mix. Its top holdings, Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), and Philip Morris International (NYSE:PM) focus on established consumer brands. IYK’s smaller AUM and narrower sector reach may appeal to those seeking targeted exposure or a modest yield edge.

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Foolish take

Despite a lower expense ratio and broader diversification, the Vanguard Consumer Staples ETF has slightly underperformed the iShares U.S. Consumer Staples ETF over the past five years. If we include the fluctuating dividend payments these funds deliver, folks who have held the iShares U.S. Consumer Staples ETF received a 57% total return over the past five years. The Vanguard Consumer Staples ETF produced a 51% total return over the same period.

If we zoom out to a 10-year timeframe, the iShares U.S. Consumer Staples ETF’s total return of 132% still outperformed the Vanguard Consumer Staples ETF's 110% total return over the same period.

Investors seeking steadily rising cash flows have been a little disappointed with their Vanguard Consumer Staples ETF shares. The fund's latest quarterly dividend payment was 28.1% lower than the payment they received five years earlier.

Dividend payments from the iShares U.S. Consumer Staples ETF are moving in the right direction for investors. The latest payment was 108% higher than the payout investors received a year earlier.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges like a stock, holding a basket of assets.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Diversification: Investment strategy of spreading assets across various holdings to reduce risk.
Dividend yield: The annual dividends paid by an investment, shown as a percentage of its price.
Beta: A measure of an investment’s volatility compared to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages for investors.
Max drawdown: The largest percentage drop from a fund’s peak value to its lowest point over a specific period.
Consumer staples: Companies producing essential goods like food, beverages, and household products that people buy regularly.
Consumer defensive: Sector focused on companies providing products and services that remain in demand during economic downturns.
Consumer cyclical: Sector including companies whose sales are sensitive to economic cycles, like retailers and automakers.
Holdings: The individual stocks, bonds, or other assets owned by a fund.

Cory Renauer 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.