Analyzing a ‘Basic’ ETF

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

As global uncertainty continues to thrive due to supply disruptions caused by the COVID-19 pandemic and the war in Ukraine, while inflation boosts the price of many consumer staples, the continued importance of consumer goods to both investors and consumers has been underscored.

One exchange-traded fund (ETF) that is heavily involved in consumer staples stocks should be familiar to my Intelligence Report subscribers: Vanguard Consumer Staples ETF (NYSEARCA: VDC). This ETF tracks a market-cap weighted index of stocks belonging to American companies that are somehow involved with the Consumer Staples sector.

This fund’s managers focus on pure-play consumer staples exposure, meaning that the basket of stocks in this fund attempts to cover wide breath and representation. While the fund tracks an all-cap index, the stocks in it are selected and weighted by market capitalization. To avoid overrepresentation, the managers have followed regulations established by the U.S. Internal Revenue Code and established an investment limit no more than 25% of the value to a single issuer and more than 5%, not exceeding 50%, of total assets.

Currently, the fund’s top holdings include Procter & Gamble Co. (NYSE: PG), Coca-Cola Company (NYSE: KO), Costco Wholesale Corp. (NASDAQ: COST), PepsiCo, Inc. (NASDAQ: PEP), Walmart Inc. (NYSE: WMT), Philip Morris International Inc. (NYSE: PM), Mondelez International, Inc. (NASDAQ: MDLZ) and Altria Group Inc. (NYSE: MO).

As of March 22, VDC has dipped 0.27% over the past month and 0.26% for the past three months. It currently is down 2.93% year to date.

Chart courtesy of

The fund has amassed $6.67 billion in assets under management and has an expense ratio of 0.10%.

Exclusive  Ringing in Retail with This Fund

In short, while VDC does provide an investor with a way to profit from consumer staples, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors should always conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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