Defensive sectors, such as consumer staples, have their advantages, namely solid dividend yields and a lack of volatility. However, that does not mean exchange-traded funds such as the popular Consumer Staples Select Sect. SPDR (ETF) (NYSE: XLP) are free lunches.
Rather, the opposite is true, as playing defense with low volatility sectors usually subjects investors to rich multiples. Investors have been willing to do that this year, as defensive and low volatility have become prized traits, helping XLP to a year-to-date gain of 2.4 percent and inflows of $1.27 billion, good for one of the best totals among all sector ETFs.
Still, XLP is expensive. At least according to AltaVista Research, which estimates ...
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