FSTA vs. PBJ: Which Consumer Staples ETF Is the Better Buy for Investors?

Investors choosing between the Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) and Invesco Food & Beverage ETF (NYSEMKT:PBJ) should start by weighing FTSA’s broad, low-cost approach against PBJ’s concentrated focus on food production and technology.

Both funds target the consumer defensive sector. But while FSTA provides wide market coverage across the U.S. consumer staples landscape, PBJ targets companies with specific growth and quality characteristics within a narrower niche of food and beverage producers.

Snapshot (cost & size)

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

FSTA is the far cheaper option for long-term holders, with an expense ratio of 0.08% versus PBJ's 0.61%. FSTA also offers a higher payout, with a dividend yield of 2.21% compared to PBJ’s 1.30%.

Performance & risk comparison

What's inside

Launched in 2013, FSTA focuses on the consumer defensive sector and holds 98 stocks. The fund tracks a broad index and manages concentration through a 25/50 weighting strategy -- a rule that caps any single holding at 25% of the portfolio and limits the combined weight of all holdings above 5% to 50%. Its largest positions include Walmart (NASDAQ:WMT) at 13.9%, Costco Wholesale (NASDAQ:COST) at 11.4%, and The Procter & Gamble Company (NYSE:PG) at 8.7%.

PBJ offers more targeted exposure with just 31 holdings. It tracks an index that screens companies based on earnings growth and share-price momentum, with a focus on food production, agricultural products, and related technologies. Top holdings include Monster Beverage (NASDAQ:MNST) at 5.6%, Corteva (NYSE:CTVA) at 5.4%, and The Coca-Cola Company (NYSE:KO) at 5.2%. PBJ was launched in 2005.

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What this means for investors

For investors who want simple, low-cost exposure to consumer staples, FSTA is hard to beat. Its 0.08% expense ratio is a fraction of PBJ's 0.61%, and that difference can compound meaningfully over time. FSTA's 98 holdings also spread risk across grocers, retailers, and household-goods giants.

PBJ, by contrast, is designed for investors who want more targeted exposure. Its 31 holdings tilt toward food, beverage, and agricultural companies selected through a quantitative screen for earnings growth and price momentum. That narrower focus can mean more upside if the food-and-beverage niche outperforms, but it also concentrates risk in a smaller basket of stocks.

It's also worth noting that broad-based consumer staples exposure like FSTA's has historically served as a defensive anchor during volatile markets, since demand for everyday goods tends to hold up even when the broader economy slows. PBJ's growth-and-momentum screen, on the other hand, is a reminder that not every "staples" fund behaves defensively.

Bottom line: those with a view on specific food and beverage trends may find PBJ's concentrated approach appealing. But for most investors seeking diversified, low-cost staples exposure, FSTA is probably the better fit.

Andy Gould has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Monster Beverage, and Walmart. The Motley Fool has a disclosure policy.