Which Consumer Staples ETF Is Better, Fidelity's FSTA or Invesco's PBJ?

Comparing the Fidelity MSCI Consumer Staples Index ETF (NYSEMKT:FSTA) and Invesco Food & Beverage ETF (NYSEMKT:PBJ) reveals a choice between a broad-market staples fund and a concentrated, active-style food industry play.

Choosing between the Fidelity and Invesco funds involves weighing the benefits of broad sector coverage against a more focused industry strategy. While both ETFs operate within the consumer staples realm, they differ significantly in their index methodologies and cost structures, which can impact long-term portfolio efficiency.

Snapshot

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Fidelity MSCI Consumer Staples Index ETF is notably more affordable with an expense ratio of 0.08%, whereas Invesco Food & Beverage ETF carries a 0.61% fee. Additionally, the Fidelity fund provides a higher payout, with a yield gap of 0.88 percentage points.

Performance & risk comparison

What's inside

The Fidelity MSCI Consumer Staples Index ETF seeks to track the MSCI USA IMI Consumer Staples 25/50 Index, providing exposure to defensive stocks. Its portfolio is heavily weighted toward consumer defensives at 97%, with minimal exposure to other sectors. It holds 104 different positions, and its largest positions include Walmart (NASDAQ:WMT) at 13.53%, Costco Wholesale Corp (NASDAQ:COST) at 11.33%, and Procter & Gamble Co (NYSE:PG) at 8.52%. It was launched in 2013. The Fidelity MSCI Consumer Staples Index ETF has paid $1.16 per share over the trailing 12 months, which on its recent ~$53.71 share price works out to a 2.2% yield.

The Invesco Food & Beverage ETF follows the Dynamic Food & Beverage Intellidex Index, which uses quantitative criteria to select its 31 holdings. This strategy results in a narrower focus than its peer, with a sector breakdown featuring 78% in consumer defensives, 8% in consumer cyclicals, and 5% in industrials. Top holdings include Coca-Cola Co. (NYSE:KO) at 5.48%, Starbucks Corp (NASDAQ:SBUX) at 5.27%, and Monster Beverage Corp (NASDAQ:MNST) at 5.23%. It was launched in 2005. The Invesco Food & Beverage ETF has paid $0.61 per share over the trailing 12 months, which on its recent ~$47.03 share price works out to a 1.3% yield.

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Which looks like the better buy

In today’s volatile stock market, consumer staples stocks provide a measure of stability for your portfolio. The Fidelity MSCI Consumer Staples Index ETF (FSTA) and Invesco Food & Beverage ETF (PBJ) both target this sector, but choosing between them depends on the factors that matter most to you.

PBJ takes a methodical approach to capital appreciation. It thoroughly evaluates companies based on a variety of investment merit criteria as its foundation to deliver returns. The ETF’s criteria for inclusion includes price momentum, earnings momentum, valuation, and management action. This is why it only has 31 holdings.

FSTA sports a number of advantages. Its expense ratio is low while its dividend yield and AUM are robust, providing income and liquidity, respectively. The fund has also outperformed PBJ over one-year and five-year periods. However, FSTA leans heavily on top mega-cap stocks, with Walmart and Costco alone comprising about 25% of the fund. This means the ETF’s performance relies substantially on these consumer staples giants.

Overall, FSTA looks like the better ETF choice, given its many positives over PBJ, so long as you’re comfortable with its focus on industry mega caps.

Robert Izquierdo has positions in Coca-Cola, Starbucks, and Walmart. The Motley Fool has positions in and recommends Costco Wholesale, Monster Beverage, Starbucks, and Walmart. The Motley Fool has a disclosure policy.