XLP charges 0.08% and yields 2.73%. IYK's reported 10-year return is higher, at 134%. The choice comes down to whether lower costs and income matter more than historical growth.
XLP's largest holding is Walmart, at 10.84%. IYK's is Coca-Cola, at 13.55%. Those differences help explain the choice between the State Street Consumer Staples Select Sector SPDR ETF (XLP) and the iShares U.S. Consumer Staples ETF (IYK). One charges less and has a slightly higher dividend yield. The other has the stronger 10-year return.
Neither fund beat the S&P 500 over the reported decade. Past returns do not show what either ETF will earn next. The choice depends on what each fund owns and which trade-offs fit an investor's portfolio.
Public market trackers report XLP has about $13.9 billion in assets and average one-month trading volume of roughly 9.7 million shares, making it one of the largest and most actively traded consumer-staples ETFs.
Different baskets of companies
XLP holds 34 stocks. Consumer defensive companies make up 98% of its portfolio. Its largest positions are Walmart at 10.84%, Costco Wholesale at 9.15%, and Procter & Gamble at 7.75%. The fund focuses on companies that sell everyday goods. State Street says XLP uses a replication strategy to track consumer-staples companies in the S&P 500. Its reported consumer-defensive allocation is around 98.5%, in line with the article's rounded figure, according to the State Street fund profile.
IYK holds 53 stocks and covers more sectors. Consumer defensive companies account for 83%, healthcare for 13%, and basic materials for 3%. Its biggest positions are Coca-Cola at 13.55%, Procter & Gamble at 13.45%, and Philip Morris International at 11.87%. The percentages add to 99%, which may reflect rounding. The figures do not explain the difference.
Global consumer-staples portfolios also commonly feature Walmart, Costco, Coca-Cola, Procter & Gamble and Philip Morris among their largest holdings. The overlap highlights how these funds can differ in sector scope and weighting even when many of their major companies are familiar across the category.
Returns favor IYK
In the 10-year period covered by the comparison, XLP returned 98% in total, equal to a 7.1% compound annual growth rate (CAGR). IYK returned 134%, with an 8.9% CAGR. Both funds trailed the S&P 500.
The comparison does not give the period's endpoint. Treat these figures as historical results for that window, not as current performance or a forecast. The stronger result for IYK matters, but another period could bring a different outcome.
Total return counts reinvested distributions and changes in share value. CAGR turns a multi-year result into a smoothed annual rate. Neither measure shows the path an investor experienced along the way.
Fees and income pull apart
XLP's expense ratio is 0.08%, compared with 0.37% for IYK. The expense ratio is the fund's annual operating cost as a share of its assets. XLP costs less. These figures do not show what an individual investor would pay in dollars; that depends on the amount invested.
XLP's dividend yield is also slightly higher: 2.73%, versus 2.67% for IYK. Yield compares a fund's distributions with its share price. It is not the same as total return. Yield can change, and a higher figure alone does not mean a fund performed better or will pay more income in the future.
Match the fund to the role
Both ETFs have low beta profiles, which point to less volatility than the broader S&P 500. That does not protect either fund from losses. Their holdings differ, too. XLP has a greater concentration in consumer defensive stocks; IYK has larger reported allocations to healthcare and basic materials.
Investors should consider whether each fund's mix fits the rest of their portfolio. Neither is a complete substitute for broad-market exposure. The role of an investment matters as much as its past record, as discussed in this inflation-hedge analysis. A fund's label or recent performance cannot decide whether it fits an investor's goals, time horizon, and tolerance for risk.
XLP's case rests on its lower fee and slightly higher yield. IYK's rests on its higher reported 10-year return and wider sector spread. XLP may suit investors who prioritize cost and focused consumer-staples exposure. IYK may suit those who prefer its broader holdings and accept the higher expense ratio. The historical return gap deserves attention. It does not promise that IYK will keep outperforming.
