VDC vs. XLP: A Staple of a Dilemma

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I started looking into these consumer staples ETFs – the State Street Consumer Staples Select Sector SPDR (XLP) and the Vanguard Consumer Staples ETF (VDC) – mostly because my aunt Mildred keeps urging me to diversify. Mildred, you should know, thinks “diversification” means owning every commemorative plate ever produced. Still, she has a point, I suppose. It’s just that wading through fund fact sheets feels…well, like alphabetizing her plate collection. Endless, and ultimately pointless. But for you, dear reader, I persevered.

Both funds, in theory, give you a slice of the American consumer, those relentless shoppers who keep the economy from completely collapsing. They’re stuffed with companies that sell things people will always need, even when the market is doing its impression of a startled meerkat. The question, then, isn’t whether these are good sectors—they are—but which fund does it better. And, honestly, it’s a surprisingly subtle difference.

Here’s the quick and dirty, as presented in a table. I always feel obligated to include tables, even though they remind me of grade school. It’s like the funds are taking a pop quiz.

Metric XLP VDC
Issuer SPDR Vanguard
Expense Ratio 0.08% 0.09%
1-yr Return (as of Feb. 12, 2026) 10.69% 9.41%
Dividend Yield 2.56% 2.10%
AUM $16 billion $9 billion
Beta (5Y monthly) 0.60 0.64

XLP, at first glance, seems slightly less greedy with its fees. A tiny difference, admittedly, but every penny counts when you’re trying to fund a sensible retirement. (Or, in my case, a slightly less chaotic existence.) It also throws off a bit more dividend income, which is nice. My brother, a staunch believer in passive income, would approve. He’s currently building a yurt and living off the grid, so his financial advice is…unique.

Looking at performance, they’re remarkably similar. Over five years, both funds have weathered the storms—and the occasional market tantrum—with equal grace. XLP eked out a slightly better one-year return, but VDC has shown a bit more growth over the longer haul. It’s like choosing between two equally reliable umbrellas. Both will keep you dry, but one might be slightly more stylish.

The real difference lies in what they hold. VDC is a bit of a maximalist, spreading its money across 104 different companies. It’s got Walmart, Costco, Procter & Gamble—the usual suspects. XLP, on the other hand, is more selective, focusing on just 36 companies. It’s like VDC is throwing a party and inviting everyone, while XLP is hosting a more intimate dinner. Both approaches have their merits.

VDC’s broader portfolio offers more diversification, which is generally a good thing. But it also means it’s more reliant on a larger number of companies. If a few of those companies stumble, the impact will be spread out. XLP, with its concentrated holdings, is more vulnerable to individual stock risk. If one of its key companies falters, it’s going to feel it more acutely. It’s a trade-off between stability and potential upside.

Honestly, for most investors, the difference is probably negligible. They’re both solid funds that offer exposure to a defensive sector. If you’re looking for a set-it-and-forget-it investment, either one will do. But if you’re like me—obsessive, overthinking, and prone to analyzing every minute detail—you’ll probably spend hours poring over the fund fact sheets, wondering which one is slightly better. And then you’ll realize it doesn’t really matter, and you’ll go back to alphabetizing your aunt Mildred’s plate collection.

For more information on ETF investing, you can find a guide here. (I haven’t read it, naturally.)

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2026-02-13 03:42