Sector ETF Portfolios: Invest in the Necessities of Life with XLP

Word is that retailers will be having a very cold holiday season this year; in fact MasterCard has noted that sales of apparel, shoes and appliances dropped considerably in the first two weeks of November. Consumers are being a little thriftier when it comes to extras as they’re worried about unemployment and the recent news of a financial crisis. But no matter what’s going on in the economy, there are just things that people need, staple items.

An investment in staples means you’re banking on something that people are always going to need and will always purchase, no matter what the economy forecast is. Consumer Staples Select Sector SPDR (NYSE: XLP) is an excellent way to invest in a variety of staples in one single investment purchase. This exchange traded fund (ETF) includes companies from food and drug retailing, beverages, household products and personal products. Items that are clearly essential to daily living.

With a single stock — XLP you will get shares of such noted companies as the Coca Cola Company (NYSE: KO), Colgate Palmolive (NYSE: CL), Kraft Foods Inc. (NYSE: KFT), PepsiCo Inc (NYSE: PEP), Procter Gamble Co. (NYSE: PG), and Wal-Mart Stores (NYSE: WMT). These are all well-known household names that will continue to be market leaders in any financial environment. If you want to invest in things that people need, XLP is a sound choice.

XLP charges a mere 0.23% fee for building a basket of the largest 41 staple providers; considerably less than a money manager would charge for the same work. The top 10 holdings are listed below and they comprise about 67% of the entire holdings. Buy XLP and you’ll own them all!

Procter & Gamble Co. 18.16%
Wal-Mart Stores Inc. 12.60%
Philip Morris 8.77%
Coca-Cola Co. 5.34%
CVS Caremark Corp. 4.71%
Kraft Foods Inc. 4.21%
PepsiCo Inc. 4.21%
Colgate-Palmolive Co. 3.36%
Altria Group Inc. 3.25%
Walgreen Co. 2.82%