Procter & Gamble Bullies This Consumer Staples ETF (XLP, PSL, RHS)

bully“Procter & Gamble(PG) fell 3.5% early today, dragging Consumer Staples Select Sector SPDR(XLP) down 1.16% with it. P&G’s slide comes in the wake of a fiscal fourth-quarter earnings drop of 18% from the previous year. Revenue in the fourth quarter fell 2.23% from the year before,”  Don Dion Reports From The Street.

“This moment is a teachable one for ETF investors who flock to funds like XLP to avoid security-specific risk. P&G accounts for more than 16% of XLP’s assets, an allocation that will surely sway the ETF. Capitalization-weighted strategies, favored by issuers like State Street(STT) and iShares, can often overweight top components when executing their strategies. XLP’s portfolio has 42 holdings, but 66% of the fund’s assets are concentrated in the fund’s top 10 components. While investors are more diversified buying XLP than picking just a couple of consumer names, they will still be particularly vulnerable to the movements of a few key components,”  Dion Reports. 
 
“The other risk inherent in buying a cap-weighted strategy like XLP is unintended overexposure on a broader scale. The top five components of XLP — P&G, Wal-Mart(WMT), Philip Morris(PM), Coca-Cola(KO) and CVS(CVS) — are large companies that an investor might own individually or in other parts of their broader portfolio strategy.  Alternatives to the cap-heavy strategy offered by XLP include PowerShares Dynamic Consumer Staples ETF(PSL) and Rydex S&P Equal Weight Consumer Staples ETF(RHS) have not gained much traction,”  Dion Reports.

Here is a list of the top companies listed within the XLP ETF below:

TOP 10 HOLDINGS ( 67.02% OF TOTAL ASSETS)  
 
Company Symbol % Assets
ALTRIA GROUP INC MO 3.72
COCA COLA CO THE KO 6.04
COLGATE PALMOLIVE CL 3.8
CVS CAREMARK CP CVS 5.12
KRAFT FOODS INC KFT 4.04
PEPSICO INC PEP 4.29
PHILIP MORRIS INTL PM 9
PROCTER GAMBLE CO PG 16.03
WAL MART STORES WMT 11.71
WALGREEN CO WAG 3.27

Full Story: HERE

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