XLP vs. RSPS: A Consumer Staples ETF Evaluation

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The State Street Consumer Staples Select Sector SPDR ETF (XLP) and the Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) both offer exposure to the U.S. consumer staples sector. However, their distinct methodologies warrant careful consideration. This analysis aims to provide a comparative assessment of these two ETFs, focusing on structural differences, performance characteristics, and potential implications for portfolio construction.

Cost & Scale Considerations

A preliminary examination reveals a divergence in operational expenses. RSPS exhibits a higher expense ratio of 0.40% compared to XLP’s 0.08%. While the differential is not negligible, it must be evaluated in conjunction with overall performance and strategic objectives. A lower expense ratio does not automatically equate to superior returns; it simply represents a smaller drag on potential gains. Furthermore, the substantial assets under management (AUM) of XLP ($16 billion) – dwarfing that of RSPS ($250 million) – suggest greater liquidity and potentially tighter bid-ask spreads, a factor particularly relevant for institutional investors.

Metric XLP RSPS
Issuer SPDR Invesco
Expense Ratio 0.08% 0.40%
1-Year Return (as of Feb. 14, 2026) 9.94% 11.75%
Dividend Yield 2.56% 2.63%
Beta (5Y Monthly) 0.60 0.61
AUM $16 billion $250 million

Performance & Risk Profile

Recent performance data indicates that RSPS has marginally outperformed XLP over the past year. However, extrapolating this short-term trend into a long-term projection would be imprudent. A more revealing metric is the maximum drawdown experienced over a five-year period, which provides insight into downside risk. RSPS exhibited a slightly larger drawdown (-18.61%) compared to XLP (-16.32%), suggesting a potentially higher degree of volatility. The growth of a $1,000 investment over five years further illustrates this dynamic, with XLP yielding $1,363 compared to RSPS’s $1,095.

Metric XLP RSPS
Max Drawdown (5Y) -16.32% -18.61%
Growth of $1,000 over 5 Years $1,363 $1,095

Portfolio Construction & Methodology

The fundamental distinction between these two ETFs lies in their portfolio construction methodologies. RSPS employs an equal-weighting strategy, allocating roughly the same capital to each of its 36 holdings. This approach aims to mitigate concentration risk and potentially capture gains from smaller, underappreciated companies. However, it also introduces the risk of diluting returns by allocating capital to underperforming stocks. XLP, conversely, tracks a market-cap-weighted index, resulting in a portfolio dominated by sector giants such as Walmart, Costco Wholesale, and Procter & Gamble. While this concentration introduces a degree of single-stock risk, it also benefits from the stability and liquidity of these established companies.

Implications for Investors

The optimal choice between XLP and RSPS is contingent upon an investor’s specific objectives and risk tolerance. For those seeking exposure to industry leaders and prioritizing stability, XLP’s market-cap-weighted approach may be more suitable. The concentration in top holdings – accounting for approximately 28% of the portfolio – provides a degree of predictability, albeit at the cost of potentially limited upside. Conversely, investors seeking broader diversification and willing to accept a higher degree of volatility may prefer RSPS. The equal-weighting strategy, while potentially more susceptible to downside risk, offers the opportunity to participate in the growth of smaller, emerging companies. It is crucial to recognize that past performance is not indicative of future results, and a thorough understanding of each ETF’s underlying methodology is paramount before making an investment decision.

For further guidance on ETF investing, please consult the available resources at this link.

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2026-02-15 01:33