Fidelity vs. Invesco: A Closer Look at Two Paths to Consumer Staples Exposure
In an uncertain economic climate, exchange-traded funds (ETFs) tracking consumer staples offer a classic harbor for defensive capital. Yet, not all harbors are built the same. A detailed comparison between the Fidelity MSCI Consumer Staples Index ETF (FSTA) and the Invesco Food & Beverage ETF (PBJ) reveals a fundamental strategic split: broad diversification versus concentrated, rules-based selection.
FSTA, with an expense ratio of just 0.08%, tracks a wide index of over 100 large- and mid-cap companies, providing blanket exposure to the sector's giants like Procter & Gamble, Costco, and Walmart. Its 12-year history shows steady performance, with an annualized return of 8.9% since 2013. In contrast, PBJ employs a momentum and value screen to select roughly 30 food and beverage firms, including Sysco and Monster Beverage. This active strategy comes at a higher cost of 0.61% and has resulted in lower annualized returns of 6.6% over the same period.
The performance gap isn't solely attributable to fees. FSTA's portfolio, while heavily weighted toward its top holdings, captures the full spectrum of consumer defensive stocks. PBJ's narrower focus, though offering a slight mix of basic materials and industrials, may miss broader sector trends. Furthermore, FSTA's recent dividend yield edges out PBJ's, adding an income advantage to its cost benefit.
"For the long-term, buy-and-hold investor prioritizing low costs and sector-wide stability, FSTA is the clear, rational choice," says Michael R. Chen, a portfolio manager at Horizon Advisory. "It's the workhorse of staples ETFs."
However, David Park, a research analyst at Cedar Point Investments, offers a counterpoint: "PBJ's factor approach and lower P/E ratio shouldn't be dismissed. For investors who believe in a targeted play on food and beverage innovation and valuation, it provides a precise tool—if you're willing to pay for the active management."
The debate turns sharper with Sarah J. Miller, an independent financial blogger known for her critical takes: "Charging 0.61% for a strategy that consistently underperforms a plain-vanilla index fund is hard to justify. PBJ feels like a solution in search of a problem, while FSTA gives you exactly what you expect from a defensive ETF: reliable, low-cost exposure."
Ultimately, the choice hinges on investment philosophy. FSTA offers efficient, broad-based exposure ideal for core defensive positioning. PBJ appeals to those seeking a tactical, albeit costlier, bet on specific factors within the food and beverage niche. In a sector prized for predictability, FSTA's lower-cost, broader path appears to have delivered more predictable results.
Beta measures price volatility relative to the S&P 500. All return and yield data is trailing and subject to change. Investors should consider their own objectives before investing.