Better Consumer Staples ETF: Vanguard's VDC vs. State Street's XLP
Key Points
The State Street Consumer Staples Select Sector SPDR ETF offers a slightly lower expense ratio and higher dividend yield than the Vanguard Consumer Staples ETF.
The Vanguard Consumer Staples ETF provides significantly broader diversification with 103 holdings compared to 35 for the State Street fund.
While the State Street Consumer Staples Select Sector SPDR ETF led on one-year returns, the Vanguard Consumer Staples ETF delivered higher total growth over the last five years.
Comparing the State Street Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) and Vanguard Consumer Staples ETF (NYSEMKT:VDC) reveals two defensive giants with nearly identical costs but different approaches to portfolio concentration and yield.
Both funds serve as defensive ballast for a portfolio, focusing on companies that sell essentials like food, beverages, and household goods. These "recession-resistant" stocks often perform differently than the broader market during periods of volatility. For investors seeking lower volatility than the broader S&P 500, these ETFs offer a focused way to own the companies behind everyday products. The fund's portfolio consists of companies that provide essential goods.
Snapshot (cost & size)
| Metric | VDC | XLP |
|---|---|---|
| Issuer | Vanguard | State Street |
| Share price | $223.55 (as of 2026-09-18) | $82.80 (as of 2026-09-18) |
| Expense ratio | 0.09% | 0.08% |
| 1-yr return (as of Sept. 18, 2026) | 5.0% | 7.0% |
| Dividend yield | 2.2% | 2.7% |
| Beta | 0.49 | 0.46 |
| AUM | $9.3 billion | $14.1 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The State Street fund is slightly more affordable with an expense ratio of 0.08% versus 0.09% for the Vanguard fund. Additionally, it offers a higher payout with a yield gap of 0.53 percentage points.
Performance & risk comparison
| Metric | VDC | XLP |
|---|---|---|
| Max drawdown (5 yr) | (16.5%) | (16.3%) |
| Growth of $1,000 over 5 years (total return) | $1,360 | $1,324 |
What's inside
The State Street Consumer Staples Select Sector SPDR ETF targets U.S. companies in the consumer staples sector of the S&P 500, resulting in a highly concentrated portfolio of 35 holdings. This concentrated approach means the fund's performance is heavily influenced by the biggest industry leaders. Its sector exposure is 98% in consumer defensive and 2% in consumer cyclical businesses. Its largest positions include Walmart (NASDAQ:WMT) at 10.54%, Costco Wholesale Corp (NASDAQ:COST) at 8.79%, and Coca-Cola (NYSE:KO) at 7.57%. It was launched in 1998, and has paid $2.20 per share over the trailing 12 months, which on its recent ~$82.80 share price works out to a 2.7% yield.
The Vanguard Consumer Staples ETF tracks a broader benchmark of 103 holdings, including companies across the full range of the consumer staples industry from small to large caps. Its sector weightings are 98% consumer defensive, with 1% consumer cyclical. Top holdings include Walmart at 13.37%, Costco Wholesale Corp at 12.02%, and Coca-Cola at 9.65%. It was launched in 2004, and has paid $4.80 per share over the trailing 12 months, which on its recent ~$223.55 share price works out to a 2.2% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Gaining exposure to consumer staples stocks is a good way to buoy an investment portfolio during market downturns. An ETF is an efficient means to do so, which is where the State Street Consumer Staples Select Sector SPDR ETF (XLP) and Vanguard Consumer Staples ETF (VDC) come in. But which is the better choice?
The answer depends on the factors that are important to you. XLP focuses on the consumer staples sector of the S&P 500 Index, which is why it only has 35 holdings. XLP is for investors who only want exposure to the biggest consumer staples companies. This offers stability, a higher dividend yield, and a stronger one-year return. However, the fund's performance depends on just a handful of companies.
VDC is for those who want greater diversification and exposure to smaller consumer staples businesses. This gives you a broader slice of the industry, including mid-cap companies that could deliver strong growth, which you would miss out on with XLP. VDC's downsides include a lower dividend yield and a higher expense ratio compared to XLP.
Robert Izquierdo has positions in Coca-Cola and Walmart. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.