Vanguard Consumer Staples ETF vs. iShares Consumer Staples ETF

Vanguard Consumer Staples ETF (NYSEMKT:VDC) and iShares U.S. Consumer Staples ETF (NYSEMKT:IYK) offer defensive equity exposure with significant differences in expense ratios, portfolio concentration, and historical risk-adjusted performance metrics.

These exchange-traded funds target the consumer staples sector, which includes companies providing essential goods such as food, beverages, and household products. This comparison examines how their differing index strategies and cost structures could impact long-term results for investors seeking lower-volatility equity exposure.

Snapshot (cost & size)

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.

Vanguard Consumer Staples ETF is the more affordable option for long-term holders with its lower 0.09% expense ratio. While iShares U.S. Consumer Staples ETF offers a higher 2.4% payout, the 0.28 percentage point fee gap remains a primary differentiator.

Performance & risk comparison

What's inside

Vanguard Consumer Staples ETF focuses almost entirely on consumer defensive stocks, which represent 98% of the portfolio. Its holdings count sits at 103, and its largest positions include Walmart at 13.9%, Costco Wholesale at 12.1%, and Procter & Gamble at 9.9%. The fund was launched in 2004. Vanguard Consumer Staples ETF has paid $4.88 per share over the trailing 12 months, which on its recent ~$239.24 share price works out to a 2% yield.

iShares U.S. Consumer Staples ETF provides more targeted exposure with 53 holdings. Its sector weights include food, beverage, and tobacco at 58% and household and personal products at 22%. Top holdings include Procter & Gamble at 13.9%, Coca-Cola at 13.3%, and Philip Morris International at 11.6%. The fund was launched in 2000. iShares U.S. Consumer Staples ETF has paid $1.89 per share over the trailing 12 months, which on its recent ~$77.35 share price works out to a 2.4% yield.

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

Which looks like the better buy

With market analysts and investors on edge about an AI bubble, a market correction, and possible interest rate hikes, many are reconsidering their portfolio concentration. Consumer staples stocks are often considered to be defensive holdings because people purchase these goods regardless of economic conditions. The biggest consumer staples names may not offer explosive growth, but they're also typically much less volatile and often pay regular dividends, which speaks to their financial strength and can help investors ride out tough economic times.

Between these two exchange-traded funds, I think Vanguard's is the more compelling option for investors seeking to bolster their portfolios with safer holdings. It's larger and more diversified than the iShares U.S. Consumer Staples ETF, and charges a significantly lower expense ratio. For long-term investors, that's a winning combination. Over the last 10 years, IYK has gained 161% on a total return basis versus VDC's 129%.

Sarah Sidlow has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.