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Should You Invest in the iShares U.S. Consumer Staples ETF (IYK)?

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Looking for broad exposure to the Consumer Staples - Broad segment of the equity market? You should consider the iShares U.S. Consumer Staples ETF (IYK), a passively managed exchange traded fund launched on 06/12/2000.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $1.12 billion, making it one of the larger ETFs attempting to match the performance of the Consumer Staples - Broad segment of the equity market. IYK seeks to match the performance of the Dow Jones U.S. Consumer Goods Index before fees and expenses.

The Russell 1000 Consumer Staples RIC 22.5/45 Capped Index measures the performance of the consumer goods sector of the U.S. equity market.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.55%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Staples sector--about 89.90% of the portfolio. Healthcare and Materials round out the top three.

Looking at individual holdings, Procter & Gamble (PG) accounts for about 16.60% of total assets, followed by Cocacola (KO) and Pepsico Inc (PEP).

The top 10 holdings account for about 64.95% of total assets under management.

Performance and Risk

So far this year, IYK has added roughly 4.39%, and is up about 15.84% in the last one year (as of 04/27/2022). During this past 52-week period, the fund has traded between $175.59 and $213.41.

The ETF has a beta of 0.88 and standard deviation of 21.05% for the trailing three-year period, making it a medium risk choice in the space. With about 58 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares U.S. Consumer Staples ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. IYK, then, is not a suitable option for investors seeking exposure to the Consumer Staples ETFs segment of the market. However, there are better ETFs in the space to consider.

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $6.98 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.70 billion. VDC has an expense ratio of 0.10% and XLP charges 0.10%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports
 
CocaCola Company The (KO) : Free Stock Analysis Report
 
Procter & Gamble Company The (PG) : Free Stock Analysis Report
 
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
 
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
 
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
 
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