The Great Grocery Gains: VDC vs. XLP in a Nutshell

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Vanguard Consumer Staples ETF (VDC) and the Consumer Staples Select Sector SPDR Fund (XLP) are two rather peculiar creatures in the land of finance, both scurrying after the same prize: U.S. consumer staples stocks. One is a broad, lumbering bear of diversification; the other, a sly fox with a sharper grin and a slightly thinner wallet. Let us peer into their jars and see which might sprout the juiciest beans.

A Snippet of Snails and Squirrels

Metric VDC XLP
Issuer Vanguard SPDR
Expense ratio 0.09% 0.08%
1-yr return (as of 2025-10-27) 0.2% (2.5%)
Dividend yield 2.2% 2.7%
Beta 0.67 N/A
AUM $8.5 billion $16.4 billion

XLP, the fox, charges a fee so small it could hide behind a decimal point-0.08% versus VDC’s 0.09%. But let us not mistake frugality for generosity! Its dividend yield, at 2.7%, is a glimmering bauble compared to VDC’s 2.2%. Yet, when it comes to size, XLP’s $16.4 billion AUM dwarfs VDC’s $8.5 billion like a mountain of marshmallows overtaking a hill of jellybeans.

Performance & Risk: A Tale of Two Seasons

Metric VDC XLP
Max drawdown (5 y) (16.54%) (16.29%)
Growth of $1,000 over 5 years $1,344 $1,268

What Lies in the Jar?

The Consumer Staples Select Sector SPDR Fund is a creature of habit, stuffing 100% of its assets into the consumer defensive sector. It holds just 37 stocks, a number so small it might as well be a family dinner party. Its top three-Walmart, Costco, and Procter & Gamble-are like three giants sitting on a teacup, wobbling with the weight of their own importance. No clever tricks with leverage or ESG here-just plain, old-fashioned greed.

The Vanguard fund, by contrast, is a more social beast. Though 98% of its diet is defensive, it spreads itself across over 100 companies, a smorgasbord of staples. Its top three remain the same, but the rest of the list is a patchwork of smaller names, each holding a sliver of the pie. It’s as if the fox and the bear both went to the same bakery but chose different recipes.

For more guidance on ETF investing, check out the full guide at this link.

Foolish Take

The Consumer Staples Select Sector SPDR Fund’s concentration has been a mixed bag. Over 10 years, it delivered a 99.6% return, while the more generous Vanguard fund managed 108.1%. Meanwhile, the S&P 500 index, that old sly fox, sauntered past both with a 290.8% return. But dividends? Oh, XLP’s quarterly payout grew by 46.3% over a decade-a feast for those who like their income with a side of risk. VDC’s 25.9% growth, meanwhile, is the kind of modesty that wins friends and influences people… eventually.

VDC tracks the MSCI U.S. Investible Market Consumer Staples 25/50 Index, a broad and bustling market. XLP, however, lingers in the narrower confines of the Consumer Staples Select Sector Index, a place where only the S&P 500’s most well-dressed guests are allowed to dance.

Glossary

Expense ratio: The annual fee, like a tax on your dreams, paid to keep the fund’s wheels turning.
Dividend yield: The sweet treat you receive for letting your money nap in the fund’s bed.
Beta: A measure of how jumpy the fund is when the market throws a tantrum.
AUM: The total value of everything the fund owns, like a treasure map to its soul.
Max drawdown: The deepest hole the fund dug during its worst week.
Growth of $1,000: How much your dollar would grow if it were allowed to wear a party hat and dance.
Consumer staples: Companies that sell things people need to survive, even when they don’t want to.
Defensive sector: Industries that don’t get nervous when the economy yells.
Leverage: Borrowing money to build a bigger house… or to burn it down.
Currency-hedging: A magic trick to protect against money’s mood swings.
ESG: A checklist for whether a company behaves nicely in the world.
Single-stock risk: The danger of putting all your eggs in one basket, then dropping it.

And so, dear reader, the tale of VDC and XLP is a lesson in balance: a dash of income, a sprinkle of safety, and a healthy dose of skepticism. After all, in the land of finance, the only thing more unpredictable than the market is the human tendency to trust it. 🛒

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2025-11-02 19:59