Evaluating Vanguard’s VDC and State Street’s XLP for Low‑Volatility Consumer Staples Exposure

Key Points

• State Street’s Consumer Staples Select Sector SPDR ETF offers a marginally lower expense ratio and a higher trailing‑12‑month dividend yield than Vanguard’s Consumer Staples ETF.

• Vanguard’s fund maintains a broader portfolio with 103 holdings, compared with the SPDR fund’s more concentrated 35‑stock basket.

• Both ETFs display comparable low‑volatility characteristics, with five‑year betas below 0.50, reflecting the defensive nature of the consumer‑staples sector.

Vanguard Consumer Staples ETF (NYSEMKT:VDC) and State Street Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) both provide defensive exposure, but VDC offers broader diversification, while XLP focuses on a narrower group of S&P 500 giants.

These ETFs target the consumer‑staples sector, which comprises companies that produce essential goods such as food, beverages, and household items. Demand for these products remains relatively stable across economic cycles, making the funds attractive to investors seeking stability and consistent income during market turbulence. Both funds track “nondiscretionary” spending—businesses that sell products consumers buy even when the economy slows—providing a defensive layer to a diversified portfolio and serving as reliable foundations for conservative, dividend‑focused strategies.

Snapshot (cost & size)

MetricVDCXLPIssuerVanguardSPDRExpense ratio0.09%0.08%1-yr return (as of June 25, 2026)4.5%5.1%Dividend yield2.2%2.6%Beta0.490.47AUM$9.1 billion$13.8 billion

Beta measures price volatility relative to the S&P 500; beta is calculated from five‑year monthly returns. The 1‑yr return represents total return over the trailing 12 months. Dividend yield is the trailing‑12‑month distribution yield.

The expense ratios are virtually identical, with a one‑basis‑point difference that is difficult to justify. XLP offers a higher trailing‑12‑month dividend yield of 2.6% versus VDC’s 2.2%. Both funds are highly liquid, but the SPDR fund manages a larger asset base of $13.8 billion compared with $9.1 billion for the Vanguard fund.

Performance & risk comparison

MetricVDCXLPMax drawdown (5 yr)(16.5%)(16.3%)Growth of $1,000 over 5 years (total return)$1,428$1,382

What’s Inside

The SPDR ETF follows a concentrated basket of 35 holdings drawn primarily from the S&P 500, targeting large‑cap U.S. companies in essential industries such as beverages, tobacco, and personal hygiene. Its top positions include Walmart (NASDAQ:WMT) at 11.19%, Costco Wholesale (NASDAQ:COST) at 9.19%, and Procter & Gamble (NYSE:PG) at 7.49%. Launched in 1998, XLP has a trailing‑12‑month dividend payout of $2.75 per share.

In contrast, Vanguard’s ETF adopts a broader approach with 103 holdings, extending beyond the S&P 500 to include a wider array of direct‑to‑consumer businesses. Its largest positions are Walmart at 14.49%, Costco at 11.83%, and Procter & Gamble at 8.69%. The Vanguard fund, launched in 2004, has a trailing‑12‑month dividend payout of $4.82.

What This Means for Investors

VDC and XLP are closely matched on expense ratios, recent returns, dividend yields, and asset size. Both funds share the same top three holdings, although VDC allocates a larger weight to them (approximately 35%). Indeed, the top ten stocks are identical across the two ETFs, differing only in weighting.

VDC does provide greater diversification through its larger number of holdings, but its performance is heavily influenced by its top ten positions, which together account for roughly 63% of the portfolio.

Liquidity also varies: XLP trades at more than 25 times the average daily volume of VDC, which may be appealing to investors who prioritize ease of entry and exit.

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