ETF Talk: VDC — Consumers ‘Gonna’ Consume!

“Put not your trust in money, but put your money in trust.”

— Oliver Wendell Holmes, Sr.

Stock prices are frequently impacted by a handful of sectors (e.g. oil, gas, artificial intelligence (AI) and technology) that react to shifts in the global market on a dime. These sectors can be volatile, especially in the current era of geopolitical uncertainty and conflict in the Middle East.

However, some sectors are increasingly stable in the face of such volatility. In America, nothing can stop consumers from picking up a few things at Walmart (NASDAQ: WMT) or Costco Wholesale Corporation (NASDAQ: COST). Companies that provide essential consumer goods are some of the most stable on the market right now.

The Vanguard Consumer Staples Fund ETF (VDC) includes stocks of companies that provide direct-to-consumer products that, based on consumer spending habits, are considered nondiscretionary. VDC is designed to track investment returns across a variety of stocks in the consumer staples sector. It is passively managed using sampling and full-replication strategies.

The top 10 holdings make up 64.52% of the portfolio’s total assets, meaning that the portfolio is mostly made up of top holdings. This is good news for those seeking stable, dependable investments that are unlikely to falter in the face of geopolitical tensions or a recession.

The fund has net assets of $9.87 billion and a dividend yield of 1.95%. It has an expense ratio of 0.09%. VDC saw some solid returns this year, up 7.68% over the last month, 13.72% over the last three months and 15.67% for the year to date.

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The top 10 holdings account for 10.50% of the portfolio’s total assets and include Walmart (NASDAQ: WMT), 15.03%, Costco Wholesale Corporation (NASDAQ: COST), 11.80%, Procter and Gamble Company (NYSE: PG), 9.79%, Coca-Cola Company (NYSE: KO), 8.22%, Philip Morris International Inc. (NYSE: PM), 4.77%, PepsiCo, Inc. (NASDAQ: PEP), 4.62%, Altria Group, Inc (NYSE: MO), 3.42%, Mondelez International Inc. (NASDAQ: MDLZ), 2.51%, Colgate-Palmolive
Company (NYSE: CL), 2.33% and Monster Beverage Corporation (NASDAQ: MNST), 2.02%.

Chart courtesy of StockCharts.com.

For those who are concerned about the impact of geopolitical events on investing, VDC is an ideal ETF because it offers exposure to a sector that is here to stay: consumer staples. It is an important addition to any portfolio because its formidable, familiar range of holdings can protect investors from economic downturns. Indeed, consumer staples are here to stay, regardless of what is happening all around us.

However, don’t just take my word for it. Investors should always do their due diligence before adding any stock, fund or ETF to their portfolio.

Of course, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Forecasts & Strategies, Tactical Trader, TNT Trader, Five Star Trader, Bullseye Stock Trader, and The Deep Woods. His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.