Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Vanguard Consumer Staples ETF VDC is suitable as a complementary satellite holding to a diversified portfolio. This exchange-traded fund, which could help provide a defensive tilt to a portfolio, holds mega-cap companies   Read more 

Bull Case

Companies held in this fund generally have stable revenue growth and cash flows.
We expect that one use for consumer staples firms' excess cash will be for smaller, bolt-on deals, which we view positively as they would offer the acquisitors the opportunity to get a better handle on the local consumer without having to incur significant financial leverage.
The fund has the lowest expense ratio of any large and liquid consumer staples ETF. Read more 

Bear Case

Some of the fund's holdings, such as tobacco stocks, have been or could be the targets of costly product liability suits.
The retailers held in this ETF operate in very competitive environments that can make margin expansion difficult.
Amazon's rollout of its online grocery service could be a disruptive event for the retailers and consumer products companies held in this ETF. Read more 

Active or Index for Overseas Exposure? 
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