VDC vs. FTXG: Which Defensive ETF Is the Better Buy?

Comparing the Vanguard Consumer Staples ETF (NYSEMKT:VDC) with the First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) highlights a classical trade-off: wide assemblage diversification astatine a debased outgo versus concentrated manufacture specialization.

Both funds put successful "non-discretionary" user companies -- the businesses radical bargain groceries, household goods, and idiosyncratic attraction products from, nary substance what the system is doing. But portion VDC casts a wide nett crossed the full user staples sector, FTXG focuses specifically connected nutrient and beverage companies.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from monthly returns implicit the disposable money past (up to 5 years). The 1-year instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

VDC is the cheaper enactment by a wide margin, with an disbursal ratio that's 0.51 percent points little than FTXG's. However, FTXG does connection a higher dividend output of 2.59% compared to VDC's 2.13%.

Performance & hazard examination

What's wrong

Launched successful 2004, VDC provides wide vulnerability to the user antiaircraft sector, holding 103 stocks. Its apical holdings are acquainted retail names: Walmart (NASDAQ:WMT) astatine 14.0%, Costco Wholesale (NASDAQ:COST) astatine 11.4%, and Procter & Gamble (NYSE:PG) astatine 8.7%. With 103 holdings, it offers much diversified sum than niche manufacture funds.

FTXG takes a narrower approach, holding conscionable 30 stocks concentrated successful the nutrient and beverage industry. Its largest positions are Archer-Daniels-Midland (NYSE:ADM) astatine 9.4%, Coca-Cola (NYSE:KO) astatine 8.5%, and Kraft Heinz (NASDAQ:KHC) astatine 8.2%. FTXG was launched successful 2016.

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What this means for investors

When choosing betwixt VDC and FTXG, you archetypal request to determine however overmuch you privation to stake connected nutrient and beverage stocks specifically versus the broader antiaircraft universe.

VDC's 103-stock portfolio means nary azygous nutrient oregon market inclination tin determination the needle that overmuch -- retail giants similar Walmart and Costco marque up a large chunk of returns, and those companies payment from dependable ft postulation and mundane spending, not conscionable nutrient prices.