As of the end of last week, the S&P 500 was down 14% since the start of the year. Concerns related to tariffs are heavily weighing on the market and sending investors for the exits.
But there are ways investors can stay safe, such as by focusing on investing in companies with resilient and essential businesses. One exchange-traded fund (ETF) that may be able to generate positive returns for investors even amid all this uncertainty is the Consumer Staples Select Sector SPDR Fund (NYSE Arca:XLP).
This ETF gives you exposure to the consumer staples sector of the S&P 500, which focuses on businesses which will generally experience resilient demand, regardless of how the economy is doing, given how essential their products are. Costco Wholesale (NASDAQ:COST), Walmart (NYSE:WMT), and Procter & Gamble (NYSE:PG) are the fund’s top three holdings, with each of them accounting for more than 8% of its overall weight.
With a heavy focus on companies involved with selling food products, beverages, household products, and personal care products, this is a good ETF to have in your portfolio as these types of businesses, while they may struggle amid challenging economic conditions, have the potential to do better than their peers.
Year to date, the Consumer Staples ETF is flat. And while that isn’t anything too exciting, it’s still a much better performance than the overall markets. Plus, when you factor in dividends, its total returns are slightly positive.
This may not make for a great growth investment to hang on to, but if you’re worried about the markets in the short term, this ETF can be a great place to park your money.