Vanguard’s VDC vs. First Trust’s FTXG

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

Both funds target the consumer staples space, but VDC casts a wider net across non-discretionary products, whereas FTXG focuses specifically on food and beverage stocks. This comparison helps clarify if the extra yield and niche tilt in FTXG compensate for 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-yr return represents total return over the trailing 12 months.

VDC is significantly more affordable with a 0.09% expense ratio, while FTXG charges 0.60%. FTXG may appeal to those seeking a higher payout, offering a 2.75% dividend yield versus VDC’s 2.10%.

FTXG focuses on the food and beverage industry, holding just 31 stocks with 91% in consumer defensive, 7% in basic materials, and 2% in industrials. Its top 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. No notable quirks are present.

In contrast, VDC tracks a broader consumer staples basket, with 98% in consumer defensive and 2% in consumer cyclical. Its top stocks are Walmart (NASDAQ:WMT), Costco Wholesale Corp. (NASDAQ:COST), and Procter & Gamble Co. (NYSE:PG). With 103 holdings, VDC offers greater diversification across household and personal products, not just food and beverage.

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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 FTXG’s focus on the food and beverage industry or VDC’s broader consumer staples approach is preferred.

If you don’t have holdings in the consumer staples industry or are looking to expand in this area for your portfolio, VDC is the better ETF over FTXG for several reasons.

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

In addition, Vanguard’s ETF delivers much better diversification, given it contains over 100 holdings versus FTXG’s small basket of 31 stocks. This helps buoy VDC during downturns in some stocks or industry segments whereas 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 boasts a higher dividend yield. Outside of that, VDC is the better choice.

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Robert Izquierdo has positions in PepsiCo and Walmart. The Motley Fool has positions in 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