Credit: Shutterstock photoIt might not be the best sign for the level of risk investors are currently willing to accept at the sector level, but the consumer staples sector is on fire.
That much is confirmed by some important data points. For example, 30 exchange traded funds hit all-time highs on Wednesday and eight were staples funds. Add to that, since the start of the current quarter, the Consumer Staples Select SPDR is up 5.4 percent, easily the best showing among the nine sector SPDRs.
That is great stuff for staples ETFs, but imagine how good things would be for these funds, particularly cap-weighted fare like Consumer Staples Select Sect. SPDR (ETF) (NYSE: XLP ), if they were getting some help from the sector's biggest constituents.
Rain On The Parade
As CNBC notes , former staples darlings such as Keurig Green Mountain Inc (NASDAQ: GMCR ), Whole Foods Market, Inc. (NASDAQ: WFM ) and Dow component Wal-Mart Stores, Inc. (NYSE: WMT ) have been drains on the staples sector this year.
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Keurig Green Mountain and Whole Foods are not big drivers of XLP's performance. Those stocks combine for barely more than 1 percent of XLP's weight and Keurig Green Mountain has the smallest allocation of the 39 stocks found on XLP's roster. Wal-Mart is a different story. The world's largest retailer is 6.3 percent of XLP's weight, making the stock the ETF's fifth-largest holding.
Depending on one's point of view, it is either impressive that XLP has been durable without help from Wal-Mart or regrettable that the stock is not doing more to help the ETF. Then there is the case of Procter & Gamble Co (NYSE: PG ). Down almost 15 percent this year, P&G hit a new 52-week low on Wednesday, but XLP hit an all-time high despite P&G being 11.3 percent of its weight.
Another way to look at XLP is this way: The ETF is up 6.1 percent this year despite P&G and Wal-Mart, two of its top five holdings, being of nine Dow stocks that are down at least 10 percent year-to-date.
Help Is On The Way
Obviously, XLP is getting help from other corners. Forty-four S&P 500 members are up at least 10 percent over the past month and five -- Clorox Co (NYSE: CLX ), Mondelez International Inc (NASDAQ: MDLZ ), Monster Beverage Corporation (NASDAQ: MNST ), Reynolds American, Inc. (NYSE: RAI ) and Walgreens Boots Alliance (NYSE: WBA ) -- are XLP holdings. Walgreens and Mondelez and top 10 holdings in XLP, combining for almost 7.8 percent of the ETF's weight.
Speaking of tobacco stocks, Reynolds American, Philip Morris International Inc. (NYSE: PM ) and Altria Group Inc (NYSE: MO ), the latter two of which are a combined 13 percent of XLP's weight, have posted an average return of almost 9 percent over the past month .
XLP's message been it is quite alright without contributions from P&G and Wal-Mart, but investors can only think about what staples ETFs would look like if those stocks were helping the cause.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
