The XLP Consumer Staples ETF Might Underperform Next Year

Summary

• Perhaps the Fed will raise interest rates a few more times, but with the recession looming, the peak is likely to be reached relatively soon.
• As soon as that happens, the outperformance of consumer staples versus the broad market will most likely stop.
• The top five positions' valuations are very high, and these five stocks alone make up 50% of the ETF.
• This ETF was good during the bear market but now it is too late.

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Investment Thesis

The Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) provides access to some of the world's largest consumer staples companies. Over the last ten years, the ETF has underperformed relative to the broad market but has

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.