Invesco (PBJ) vs. Fidelity (FSTA): Which Consumer Staples ETF Is the Better Buy?

The Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) stands out for its ultra-low costs, broader diversification, and higher recent total returns compared to the more concentrated and pricier Invesco Food & Beverage ETF (NYSEMKT:PBJ).

Both the Invesco Food & Beverage ETF and Fidelity MSCI Consumer Staples Index ETF target the U.S. consumer staples sector, but their approaches differ: FSTA tracks a broad index of over 100 large- and mid-cap consumer defensive stocks, while PBJ uses a rules-based strategy to select 30 food and beverage companies based on momentum and value factors. This comparison unpacks the key differences investors may want to consider.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The one-year return represents total return over the trailing 12 months.

FSTA is notably more affordable, charging just 0.08% in annual fees, compared to PBJ’s 0.61%. FSTA also offers a higher recent dividend yield, which could appeal to investors seeking income alongside defensive sector exposure.

Performance & risk comparison

What's inside

FSTA tracks a broad consumer staples index and holds 97 stocks, providing exposure to household names and industry leaders. Its portfolio is dominated by consumer defensive companies (98%), with top holdings such as Costco Wholesale, Walmart, and Procter & Gamble. The fund has a 12-year track record, and its top three positions account for over a third of assets, reflecting a tilt toward the largest players in the sector.

PBJ is more concentrated, with only 30 holdings, and its selection process incorporates momentum, quality, and value screens. PBJ’s sector exposure is a little broader: 89% consumer defensive, 5% basic materials, and 3% industrials. Its largest positions are Sysco, Corteva, and Monster Beverage, which together offer a mix of food distributors, agricultural firms, and beverage companies. Neither fund has notable quirks or non-standard structural features.

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What this means for investors

While I really like the idea of PBJ tracking some of the world’s best food and beverage stocks, the ETF has underperformed its peer, FSTA, generating 6.6% annualized total returns versus FSTA’s 8.9% since 2013. A decent chunk of this difference comes from PBJ’s rather hefty expense ratio of 0.61%, which is 0.5 percentage points higher than FSTA’s. Similarly, FSTA’s dividend yield is also 0.5 percentage points higher, giving the ETF a major advantage over PBJ.

Considering that both steady-Eddie ETFs have below-market betas, this alpha really sets FSTA apart from PBJ, in my eyes. That said, two things are worth prospective investors taking note of. First, PBJ’s average P/E ratio is only 18 versus FSTA’s mark of 25. However, my argument is that FSTA holds higher-growth stocks that tend to command loftier valuations.

Second, 45% of FSTA’s portfolio is allocated to Walmart, Costco, Procter & Gamble, and The Coca-Cola Company, so investors will want to make sure they’re comfortable owning these securities before buying, given their large positions. While that is a sizeable portion of any portfolio dedicated to just four stocks, these are four of the most stable consumer staples stocks on earth, so the risk is not as great as it may seem.

Ultimately, I would only consider buying FSTA for the reasons mentioned here. While I like a lot of the food and beverage stocks in the PBJ ETF, I’d rather pick and choose my favorites and buy them individually, rather than pay the fund’s 0.61% expense ratio.

Josh Kohn-Lindquist has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale, Monster Beverage, Sysco, and Walmart. The Motley Fool has a disclosure policy.