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An ASX ETF for uncertain times

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Exchange-traded funds (ETFs) can be a great way to add easy and simple diversification to one’s ASX share portfolio. Whilst market-wide index ETFs like the Vanguard Australian Shares Index ETF (ASX: VAS) remain popular choices for ASX investors, there are a number of quality thematic ETFs to consider as well. One such ETF is the iShares Global Consumer Staples ETF (ASX: IXI).

How does this ASX consumer staples ETF work?

This ETF aims to hold a basket of global companies that, according to iShares, provide “exposure to companies that produce essential products, including food, tobacco and household items”. These ‘consumer staples’ producing companies can be useful in a portfolio, as their ‘essential’ nature can prove defensive against external factors that can harm spending in other areas of the economy. As a case in point, many of the companies in this ETF have done exceptionally well in 2020 amidst the coronavirus-induced global recession.

What kind of companies does it hold?

So what kinds of companies appear in this fund? At the current time, IXI holds 92 stocks. The United States has the heaviest weighting (with 53.21% of the holdings). However, it is also exposed to the United Kingdom (10.26%), Switzerland (9.9%), Japan (6.79%) and France (4.84%).

Its largest holdings are as follows: Procter & Gamble Co (NYSE: PG), Nestle SA, Costco Wholesale Corporation (NASDAQ: COST), Walmart Inc (NYSE: WMT), PepsiCo Inc (NASDAQ: PEP), Coca-Cola Co (NYSE: KO), Philip Morris International Inc (NYSE: PM), Unilever PLC (LON: ULVR), L’Oreal SA and Diageo PLC (NYSE: DEO).

So you can see it’s rather a mixed bag here. Procter & Gamble is known for its Gillette razors and Oral-B toothpaste. Nestle, for coffee, infant formula and a massive range of snack foods. Costco and Walmart are American grocery chains, whereas Coca-Cola and Pepsi are drink and snack manufacturers. Next up, we have Diageo and Philip Morris, your classic ‘sin stocks’. They make alcoholic beverages and tobacco products respectively. We even have makeup titan L’Oreal in the mix. Interestingly, our own Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are also present in this fund, as is Treasury Wine Estates Ltd (ASX: TWE).

IXI charges a management fee of 0.47% per annum, and has returned an average of 11.7% per annum over the past 10 years. It also offers a current trailing dividend yield of 2.05%.

What’s to like with this ETF?

The iShares Global Consumer Staples ETF is a current ‘Buy’ recommendation of the Motley Fool’s Pro service. The Pro team thinks this fund has what it takes to be market-beating over the next decade, and like the stability, global diversification and volatility-dampening characteristics that IXI brings to the table. 

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Sebastian Bowen owns shares of Coca-Cola, PepsiCo, Philip Morris International, and Procter & Gamble. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Costco Wholesale. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Diageo, Diageo, and Unilever. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, iShares Global Consumer Staples ETF, and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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