3 Best ETFs for Conservative Investors

The prospects of a recession are rising amid continued inflation and the Fed’s tough stance on it. Market uncertainties are widespread, and investors should exercise extreme caution at this time. We think the quality ETFs Consumer Staples Select Sector (XLP), Invesco Preferred (PGX), and Vanguard Utilities Index (VPU) may be the right investments for conservative investors. read on….

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The US economy is currently grappling with a double whammy of red-hot inflation and frequent rate hikes. While investors await July’s job reports, economists expect 258,000 jobs to be added last month, down from 372,000 in June. In addition, the Wells Fargo Investment Institute expects Unemployment to reach 4.3% by the end of 2022.

According to veteran economist Mohamed El-Erian, The threat of recession is “getting higher” and higher.” However, he added that productive fiscal intervention and increased labor force participation could avert a major blow to the US economy.

Given the increased volatility, as evidenced by the CBOE Volatility Index’s 25.8% year-over-year gain, conservative and risk-averse investors may consider purchasing quality ETFs that choose the Consumer Staples Sector SPDR Fund (xlp), Invesco Preferred ETF (PGX), and Vanguard Utilities Index Fund (vpu) to protect your portfolio.

Consumer Select Staples Sector SPDR Fund (xlp,

XLP offers exposure to the consumer staples sector. It is an attractive option for investors during recession. The ETF offers impressive liquidity, cost efficiency and depth of risk, making it one of the best ETF options in the consumer staples sector.

With assets under management (AUM) of $15.64 billion, XLP’s top holdings include The Procter & Gamble Company (PG) with a 14.73% weightage in the fund, followed by The Coca-Cola Company (KO) at 10.74%, and PepsiCo, Inc. ,Excitement) at 10.49%. It currently has a total of 34 holdings.

Over the past year, the ETF had net inflows of $2 billion. In addition, 0.10% of expense ratio Compares favorably to the category average of 0.37%.

XLP pays a $1.80 annual dividend yield of 2.39% at the current share price. Its four-year average dividend yield is 2.58%. Its dividend has grown at 4.1% CAGR in the last three years and 4.6% in the last five years. Over the past year, XLP has gained 6% to close the previous trading session at $74.81.

It should come as no surprise that XLPs have an overall B rating, which is on par with the Buy we own. power rating Arrangement In addition, it has an A grade for trade and peer and B for buy and hold.

XLP is ranked #7 out of 48 ETFs B-Rated Consumer-Focused ETFs group. Click Here To view all XLP ratings.

Invesco Preferred ETF (PGX,

PGX provides investors with exposure to preferred stocks. Preferred shareholders hold a “preferred” position on the asset compared to other common shareholders, but are devoid of voting rights. They are ideal for those looking to boost yields in a portfolio or are looking for alternatives with less exposure to equity exposure.

As the top holding of Invesco Shrt-Trm Inv Gov&Agcy Instl, the fund has a 2.77% leverage, followed by Citigroup Inc Deposit Ss Rep 1/1000th 6 7/8% Non-Commercial Pfd Shs Series 1.61%, and Wells Fargo & Co. 4.75% PRF PERPETUAL USD 25 Series Z Class A at 1.40%. PGX has $5.87 billion in AUM. It has a total of 294 holdings.

Its net inflows last month stood at $16.76 million. Its 0.51% expense ratio is lower than the 0.54% category average.

PGX pays a dividend of $0.63 annually, which is 5.20% at current price. Its four-year average dividend yield was 5.36%. The fund is up 7.6% over the past month to close the previous trading session at $13.41.

PGX’s strong fundamentals are reflected in its POWR rating. It has an overall B rating, which translates into a buy in our proprietary rating system.

It has an A grade for trade and B for buy and hold. PGX is ranked #8 out of 22 ETFs in B-Rated Convertible Bonds/Preferred Stock ETFs group. To view PGX’s rating for Peer Grade, click Here,

Vanguard Utilities Index Fund (vpu,

VPU provides exposure to the domestic utility sector, which has historically demonstrated low volatility with consistently attractive distribution returns. It is ideal for investors who wish to establish a short-term strategic orientation rather than long-term buy and hold investors.

The fund has $5.89 billion in AUM. Its top holdings include NextEra Energy, Inc. ,Ni) with 13.37% weightage, Duke Energy Corporation (Duke) with 7.25%, and Southern Company (So) with 6.65%. In addition, it has a total of 67 holdings.

Its net inflows came in at $407.71 million over the previous year. Its 0.10% expense ratio is in line with the 0.42% category average.

VPU pays an annual dividend of $4.35, yielding 2.69% over the current share price. It has an average four-year dividend yield of 3.00%. In addition, its dividend has grown at a CAGR of 3.9% in the last three years and 3.5% in the last five years. In the past one year, VPU has gained 11% to close the previous trading session at $162.02.

The VPU’s power rating shows solid possibilities. It has an overall A rating, which equates to a strong buy in our proprietary rating system. In addition, it has an A grade for trade, buy and hold and peer.

A-rated. VPU is ranked #2 out of 13 ETFs in the Utility ETFs group. Click Here To see all ratings of VPU.

Shares of XLP fell $0.29 (-0.39%) in premarket trading on Friday. Year-on-year, XLP is down -1.82%, while the benchmark S&P 500 index has gained -12.86% during the same period.

About the Author: Riddhima Chakraborty

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Riddhima is a financial journalist who has a passion for analyzing financial instruments. with Master’s Degree in EconomicsShe helps investors make informed investment decisions through her insightful comments.


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