Exploring why Cyclical and Non-Cyclical ETFs Fell on Wednesday
XLP ETF falls
The Consumer Staples Select Sector SPDR ETF (XLP) fell on November 4, 2015, by 0.4%, while the Vanguard Consumer Staples ETF (VDC) saw a 0.53% fall in its price on the same day. The fall was not only limited to the United States, as some prominent Consumer Staples ETFs in emerging markets fell too.
The EGShares Emerging Market Consumer ETF (ECON) and the Brazil Consumer ETF (BRAQ) also fell by 1.37% and 1.43%, respectively. Defensiveness in the Consumer Staples sector can be a good indicator of market sentiments, so let’s have a look at how the fund flows are stacking up in the consumer staples of the United States (XLP) against emerging markets (ECON) after the recent market bottom on August 24, 2015.
The chart above clearly depicts that the net fund flow in the United States XLP ETF has been on a positive side with a total inflow of $185 million since the fall when compared with the Emerging Markets ETF (ECON), with net outflow of $208 million during the same period. An important thing to note here is that the prices of both ETFs have risen, indicating a defensive market sentiment.
The Consumer Staples Select Sector ETF (XLP) has exposure to stocks like Procter & Gamble (PG), Coca-Cola (KO), and Phillip Morris (PM), whereas the EGShares Emerging Market Consumer ETF (ECON) has exposure to Naspers (NAPRF) and Ambev (ABEV).
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