XLP Provides Broad Staples Exposure, While PBJ Focuses on a Specific Sub-Sector. Which ETF is Right for Average Investors?

The State Street Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) and the Invesco Food & Beverage ETF (NYSEMKT:PBJ) both target the U.S. consumer sector, but XLP offers broader staples exposure at a lower cost and higher yield, while PBJ focuses on food and beverage with a more diversified sector mix and higher trading friction.

XLP and PBJ both give investors access to U.S. companies in food, beverage, and consumer defensive industries, but their approaches and underlying holdings differ. This comparison looks at cost, recent returns, risk, liquidity, and portfolio makeup to see which fund may better fit specific objectives.

Snapshot (Cost & Size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

XLP is more affordable to hold, with a 0.08% expense ratio versus PBJ’s 0.61%, and also pays a higher yield, making it more attractive for cost- and income-focused investors.

Performance & Risk Comparison

What's Inside

PBJ tracks 31 U.S. food and beverage companies, drawing 89% of its portfolio from consumer defensive names but also including basic materials and industrials for added diversification. Its top holdings as of early Feb. 2026 are Corteva Inc (NYSE:CTVA), Sysco Corp (NYSE:SYY), and Monster Beverage Corp (NASDAQ:MNST), each near 5%. The fund has been around for over 20 years and rebalances quarterly, which may introduce some turnover and sector rotation not found in traditional index funds.

By contrast, XLP is tightly focused on the consumer defensive sector, with 100% of assets in staples. Its 36 holdings include Walmart Inc (NASDAQ:WMT), Costco Wholesale Corp (NASDAQ:COST), and Procter + Gamble Co. (NYSE:PG) as the largest positions. XLP’s sector purity may appeal to those seeking a classic defensive tilt and less exposure to cyclical segments.

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What This Means For Investors

The State Street Consumer Staples Select Sector SPDR ETF (XLP) and the Invesco Food & Beverage ETF (PBJ) are two sector-specific exchange traded funds (ETFs) that focus on the consumer staples and food & beverage industries, respectively. Here’s what investors should know about these two ETFs.

To start, let’s note that these two funds share some common attributes. Both consumer staples and food & beverage stocks are considered defensive industries, since demand for these products tends to remain steady — even in periods of economic stagnation or outright recession. Similarly, since many companies in these sectors are mature, they tend to pay dividends. Consequently, each fund boasts a decent dividend yield — 1.6% for PBJ and 2.4% for XLP.

Turning to differences, XLP casts its net broadly across the consumers staples sector, incorporating large holdings in retailers like Walmart and Costco, while also holding a significant position in product manufacturers like Procter + Gamble and Coca-Cola. PBJ, meanwhile, focuses more directly on food & beverage manufacturers and distributors. Top holdings include Hershey, Pepsi, and Sysco.

Performance-wise, XLP has delivered larger gains, with a compound annual growth rate (CAGR) of 8.6% over the last ten years, while PBJ has generated a CAGR of 6.6% over the same period. As for fees, XLP boasts much lower fees, with an expense ratio of 0.08%, as compared to 0.61% for PBJ.

To sum up, XLP will be favored by many investors for its low fees, higher income potential, and better long-term performance. However, for investors with a particular interest in the food & beverage sub-sector, PBJ may be worth consideration.

Jake Lerch has positions in Coca-Cola, Hershey, and Procter & Gamble. The Motley Fool has positions in and recommends Costco Wholesale, Hershey, Monster Beverage, Sysco, and Walmart. The Motley Fool has a disclosure policy.