Which Consumer Staples ETF Is a Better Buy: Invesco's RSPS or SPDR's XLP?

When comparing the Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) to the State Street Consumer Staples Select Sector SPDR ETF (XLP), investors must consider several key factors. On the cost front, XLP offers a lower expense ratio of 0.08% compared to RSPS's 0.4%. In terms of income, RSPS provides a slightly higher distribution yield of 2.8%.

Both funds invest in 35 consumer staples stocks, with 98% of XLP's holdings in defensive companies and 2% in cyclical ones, while RSPS is 97% defensive and 3% cyclical. Notably, XLP's top holdings include Walmart, Costco, and Coca-Cola, while RSPS's include Target, Dollar Tree, and General Mills. Historically, XLP's cap-weighted structure has resulted in better returns and a smoother performance over a five-year period, while RSPS spreads exposure across smaller names, potentially avoiding dominance by any single company.

For most investors seeking defensive exposure, State Street's XLP is recommended as it offers a broader, cost-effective approach with a proven track record.