VDC vs. FSTA: Vanguard ETF Tops Fidelity on Size and Duration

Vanguard Consumer Staples ETF (NYSEMKT:VDC) stands out for its larger assets under management and longer history, while Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) matches it closely on cost, yield, and performance.

Both VDC and FSTA target the U.S. consumer staples sector, offering broad exposure to companies that provide essential goods regardless of economic cycles. This comparison highlights their subtle differences to help investors decide which ETF may better align with their priorities.

Snapshot (cost & size)

The 1-yr return represents total return over the trailing 12 months.

FSTA is slightly more affordable on expenses, but the difference is minimal, and both funds offer the same dividend yield, making cost and payout unlikely to be deciding factors.

Performance & risk comparison

What's inside

Vanguard Consumer Staples ETF tracks the U.S. consumer staples sector with 103 holdings, spanning 98% consumer defensive stocks. Its top constituents include Walmart, Costco Wholesale, and Procter & Gamble. With nearly 22 years in operation and no structural quirks, it offers diversified exposure to companies that produce everyday essentials.

Fidelity MSCI Consumer Staples Index ETF provides nearly identical sector weights and top holdings -- Costco Wholesale, Walmart, and Procter & Gamble -- each with slightly over 100 positions. Both funds avoid leverage, foreign currency hedging, or ESG overlays, focusing purely on the core staples universe.

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

Investors looking for broad exposure to the consumer staples sector couldn't go wrong by choosing either of these funds. The top holdings are remarkably similar. Both funds have the same equities as top 10 holdings, in nearly the same order and position size. Both are focused on North America with no foreign holdings.

Vanguard's VDC has been in existence since 2004 and has a 9.2% since inception. The 8.3% lifetime return from the Fidelity ETF goes back only to 2013.

Two top factors to research when buying ETFs are expense ratios and dividend yields. Both can meaningfully impact returns over time. Yet these are nearly identical between the two funds.

Investors could simply decide which fund manager makes more sense for them. Already having an account with either Vanguard or Fidelity might be the factor to decide which to add to your portfolio.

Glossary

ETF: Exchange-traded fund; a basket of securities traded on an exchange like a stock.
Expense ratio: Annual fee, expressed as a percentage, that funds charge to cover operating costs.
Dividend yield: Annual dividends paid by a fund or stock divided by its current price, shown as a percentage.
Beta: A measure of an investment's volatility relative to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Consumer staples sector: Industry segment focused on companies providing essential products like food, beverages, and household goods.
Holdings: The individual stocks or securities owned by a fund.
Sector exposure: The proportion of a fund's assets invested in a particular industry or sector.
Issuer: The company or financial institution that creates and manages an ETF or mutual fund.
Track record: The historical performance and longevity of a fund since its inception.
Drawdown: A decline in investment value from a peak to a trough, before a new peak is achieved.

Howard Smith 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.