iShares vs. Invesco: Which ETF Wins This Consumer Staples Showdown?

Invesco S&P 500 Equal Weight Consumer Staples ETF (NYSEMKT:RSPS) provides diversified exposure to defensive stocks, while iShares U.S. Consumer Staples ETF (NYSEMKT:IYK) offers a more concentrated, market-cap-weighted portfolio with historically stronger total returns.

Both funds focus on the consumer staples sector, which investors often seek out as a defensive harbor during market volatility. While RSPS treats every constituent equally to avoid overexposure to giant companies, IYK follows a traditional market-cap approach that leans heavily on industry leaders.

Snapshot (cost & size)

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. Dividend yield is the trailing-12-month distribution yield.

Both funds are cost-efficient, though the iShares fund is slightly more affordable. While RSPS offers a slightly higher dividend yield of 2.8%, IYK provides a similar payout at 2.7%.

Performance & risk comparison

What's inside

The iShares ETF targets U.S. companies in the consumer defensive sector using a market-capitalization-weighting strategy. With 54 holdings, its largest positions include Procter & Gamble (NYSE:PG) at 13.45%, Coca-Cola(NYSE:KO) at 12.38%, and Philip Morris International (NYSE:PM) at 11.14%. The portfolio is primarily composed of consumer defensive stocks at 85%, with additional exposure to healthcare at 11% and basic materials at 3%. Launched in 2000, it has a trailing-12-month dividend payout of $1.89 per share.

In contrast, the Invesco ETF tracks the S&P 500 Equal Weight Consumer Staples Index, which assigns an equal weight to every staples company in the S&P 500. This 37-holding portfolio includes Monster Beverage (NASDAQ:MNST) at 3.32%, Casey's General Stores (NASDAQ:CASY) at 3.30%, and Keurig Dr Pepper (NASDAQ:KDP) at 3.18%. It is heavily concentrated in consumer defensive stocks. Launched in 2006, it has a trailing-12-month dividend payout of $0.84 per share.

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

What this means for investors

While I think both of these ETFs would likely appeal to defensive investors, the fundamental difference in their approach to position sizing is probably the deciding factor in choosing one over the other.

RSPS may be more attractive to conservative investors given its equal-weight strategy; the smaller position sizing reduces concentration risk. Due to IYK's market-cap-weighting approach, the ETF is inherently far more reliant on just a few stocks to fuel its performance. The fund's top three holdings -- P&G, Coca-Cola, and Philip Morris -- account for roughly 37% of the portfolio. And while these are generally stalwart stocks, investors might want to note that P&G has underperformed the market by a wide margin over the past five years, up only 14% versus the S&P 500's 80% gain. Despite that, the iShares ETF has delivered better returns recently.

One final thing to consider is their relative size. RSPS has significantly fewer assets under management, as well as much lower average trading volume. If liquidity is an important consideration, IYK may be the better option for your portfolio.

Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monster Beverage. The Motley Fool recommends Casey's General Stores and Philip Morris International. The Motley Fool has a disclosure policy.