Better Consumer Staples ETF: Vanguard’s VDC vs. First Trust’s FTXG

He Vanguard Consumer Staples ETF (NYSEMKT:VDC) stands out for its low cost and broad sector coverage, while the First Trust Nasdaq Food and Beverage ETF (NASDAQ:FTXG) it trades at a higher cost, pays a higher yield and focuses on food and beverage companies.

Both funds target the consumer staples space, but VDC casts a broader net across non-discretionary products, while FTXG focuses specifically on food and beverage stocks. This comparison helps clarify whether the additional performance and niche tilt in FTXG offsets its higher costs and narrower portfolio.

Beta measures price volatility relative to the S&P 500; Beta is calculated from five-year weekly returns. The 1-year return represents the total return over the past 12 months.

VDC is significantly more affordable with an expense ratio of 0.09%, while FTXG charges 0.60%. FTXG may be attractive to those looking for a higher payout, as it offers a dividend yield of 2.75% compared to 2.10% for VDC.

FTXG focuses on the food and beverage industry and owns only 31 stocks, of which 91% are consumer defensive, 7% are basic materials, and 2% are industrial. Its main holdings are PepsiCo, Inc. (NASDAQ:PEP), Archer-Daniels-Midland Company (NYSE: ADM)and Mondelez International, Inc. (NASDAQ:MDLZ). The fund has a track record of 9.4 years. There are no notable quirks.

In contrast, VDC follows a broader core consumption basket, with 98% in defensive consumption and 2% in cyclical consumption. Its main actions are Walmart (NASDAQ:WMT), Costco Wholesale Corp. (NASDAQ:COST)and Procter & Gamble Co. (NYSE:PG). With 103 holdings, VDC offers greater diversification in personal and home products, not just food and beverages.

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Both the Vanguard Consumer Staples ETF (VDC) and the First Trust Nasdaq Food & Beverage ETF (FTXG) offer investors exposure to the stable, income-generating consumer staples sector. The choice comes down to whether you prefer FTXG’s focus on the food and beverage industry or VDC’s broader consumer staples focus.

If you have no holdings in the consumer staples industry or are looking to expand your portfolio in this area, VDC is the better ETF than FTXG for several reasons.

VDC has a higher one-year return, a smaller maximum drawdown and a lower expense ratio. It also has substantial assets under management of over $9 billion compared to FTXG’s much smaller $17.9 million, giving VDC greater liquidity.

Additionally, the Vanguard ETF offers much better diversification, as it contains over 100 holdings compared to FTXG’s small basket of 31 stocks. This helps boost VDC during downturns in some stocks or industry segments, while FTXG is more vulnerable.

FTXG is the ETF for investors who want to increase their exposure specifically to the food and beverage sector and are willing to pay a higher expense ratio for it. The fund also has a higher dividend yield. Other than that, VDC is the best option.

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Robert Izquierdo has positions at PepsiCo and Walmart. The Motley Fool has positions and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.

Better Consumer Staples ETF: Vanguard’s VDC vs. First Trust’s FTXG was originally published by The Motley Fool