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I downgrade the Invesco Food & Beverage ETF to a Hold as I expect this ETF to underperform IVV into 2027. While the combination of macro stress factors looks partly similar to 2022, the core of the narrative is different, making defensive plays like PBJ tactically unattractive. PBJ delivers nothing particularly appealing in terms of the triad of "earnings resilience, GARP profile, and quality," making it prone to underperformance versus IVV.
August hiring rebounded sharply, boosting rate-hike bets. Here are a few ETFs that could benefit from resilient economic growth and shifting rate dynamics.
The State Street Consumer Staples Select Sector SPDR ETF (XLP) offers a much lower expense ratio of 0.08% compared to 0.61% for Invesco Food & Beverage ETF (PBJ). XLP provides a higher dividend yield and has historically delivered stronger total returns over five years.
The Fidelity MSCI Consumer Staples Index ETF offers a lower expense ratio and a higher dividend yield than the Invesco Food & Beverage ETF. The Invesco Food & Beverage ETF targets a concentrated basket of 31 stocks, while the Fidelity MSCI Consumer Staples Index ETF provides broader exposure with 104 holdings.
iShares U.S. Consumer Staples offers broader diversification with 53 holdings versus PBJ's 31, plus a lower 0.38% expense ratio and higher 2.6% dividend yield for income investors.
The Vanguard Consumer Staples ETF and the Invesco Food and Beverage ETF are built to weather recessions, but one is the better choice.
IYK delivered 8.3% returns over one year with a 2.5% dividend yield, while maintaining broader sector diversification across household products and tobacco alongside food and beverage stocks.
The Fidelity MSCI Consumer Staples Index ETF (FSTA) carries a significantly lower expense ratio of 0.08% compared to the 0.61% charged by Invesco Food & Beverage ETF (PBJ). PBJ maintains a concentrated portfolio of 31 holdings, while FSTA offers broader exposure with 98 positions.