Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Vanguard Consumer Staples exchange-traded fund VDC provides exposure to a defensive sector. Investors interested in the U.S. consumer staples sector should be aware that the space generally produces relative outperformance   Read more 

Bull Case

Companies held in this fund generally have stable revenue growth and cash flows.
One use for consumer staples firms' excess cash will be for smaller, bolt-on deals, which we view positively as they would offer potential acquirers the opportunity to get a better handle on the local consumer without becoming steeply indebted.
The fund has the lowest expense ratio of any large and liquid consumer staples ETF. Read more 

Bear Case

The retailers held in this ETF operate in very competitive environments that can make margin expansion difficult.
Higher interest rates could pressure some of the firms held in this ETF as investors revise upward their required rates of return.
A stronger dollar is hurting some of the firms held in this ETF that have significant foreign revenue. Read more 

Why Index Construction Matters for ETF Investors 
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