What is the main difference between XLP and XLY?

XLP tracks the consumer staples sector, comprising companies that sell essential goods like food and hygiene products, which tend to be stable during economic downturns. XLY tracks the consumer discretionary sector, comprising companies selling non-essential goods like luxury items and electronics, which are more cyclical and sensitive to economic changes.

Are XLP and XLY actively managed?

No, both funds are designed to passively track a specific sector index, rather than relying on active management.

Why are consumer staples considered defensive?

Consumer staples are considered defensive because the products they sell are necessities, so their revenues tend to remain stable even during periods of economic uncertainty or recession.

Do XLP and XLY have different expense ratios?

Both XLP and XLY have an identical expense ratio of 0.08%, so there is no fee difference to consider when comparing the costs of these two specific ETFs.

What is the dividend yield difference between XLP and XLY?

XLP offers a dividend yield of 2.67%, while XLY offers a lower yield of 0.83%. XLP is therefore more suitable for income-focused investors, whereas XLY prioritises potential capital growth over regular cash distributions.

Are the top holdings of XLP and XLY similar?

No, the top holdings of XLP and XLY are completely different, with zero overlap in their top-10 holdings lists. XLP’s top holdings include WMT and COST, while XLY’s top holdings are dominated by AMZN and TSLA.

Which fund is a better fit for growth investors?

XLY is typically associated with growth-oriented investing, given its exposure to higher-growth consumer discretionary companies like AMZN and TSLA. XLP focuses on stability and income, aligning more with defensive positioning.

Is there concentration risk in either of these ETFs?

Yes, both ETFs exhibit concentration risk in their top holdings. XLY has a notably higher concentration, with its top two holdings (AMZN and TSLA) making up over 41% of assets, whereas XLP’s top holding is 10.54% (WMT).

How do the sectors of XLP and XLY behave in a market downturn?

The consumer staples sector tracked by XLP typically performs better during market downturns, as people continue to buy essential goods. The consumer discretionary sector tracked by XLY is more sensitive to economic cycles and may perform worse during downturns.

How does liquidity compare between XLP and XLY?

Both funds are highly liquid, but XLY has a greater scale, with $21.8 billion in net assets compared to XLP’s $13.9 billion. This larger size can contribute to tighter bid-ask spreads for active traders.

How do the inception dates of XLP and XLY compare?

Both funds share the same inception date, having been established on December 16, 1998, so both have been on the market for over two decades.

Why are the sector weights and index methodologies for these ETFs not available?

The provided data for XLP and XLY does not include the specific index they track or their sector weightings, which limits transparency into the exact methodology and construction of each ETF.

XLP vs XLY

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

Compare XLP (Consumer Staples) and XLY (Consumer Discretionary). This page reviews fees, holdings, dividends and how each fund tracks its market. Both have a 0.08% expense ratio, but differ in assets, yields, and top holdings. Educational content, not financial advice.

Compare XLP (Consumer Staples) and XLY (Consumer Discretionary). This page reviews fees, holdings, dividends and how each fund tracks its market. Both have a 0.08% expense ratio, but differ in assets,...

Fund Snapshot

Key Fund Metrics

XLP

Metric

XLY

0.08%

Expense Ratio

0.08%

2.67%

Dividend Yield

0.83%

$13.93B

Net Assets

$21.78B

37

Holdings

50

Dec 16, 1998

Inception Date

Dec 16, 1998

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Index Tracked

–

Consumer Defensive

Fund Category

Consumer Cyclical

Both funds charge the same annual fee.

Shared Top Holdings

These funds do not share any of their top holdings.

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Investment Analysis

XLP

Pros

The fund offers a low 0.08% expense ratio and a substantial 2.67% dividend yield for defensive positioning.
It holds $13.9 billion in net assets, providing liquidity and scale within the consumer staples category.
Established in December 1998, it tracks a mature sector with large, stable holdings such as WMT and COST.

Considerations

Index tracked and sector weights are not available, limiting transparency on specific methodology or benchmark alignment.
Top holdings are concentrated in large-cap names, with the largest position at 10.54%, which may increase single-stock risk.
The focus on defensive consumer staples may limit growth potential compared to more cyclical or technology-led sectors.

XLY

Pros

The fund provides exposure to growth-oriented consumer discretionary companies with a low 0.08% expense ratio.
With $21.8 billion in net assets, it is significantly larger than its defensive counterpart, enhancing liquidity for traders.
Its top holdings include high-growth names such as AMZN and TSLA, offering potential capital appreciation in rising markets.

Considerations

Index tracked and sector weights are not available, creating opacity around the precise benchmarking methodology used.
Dividend yield is very low at 0.83%, making it unsuitable for income-focused investors seeking regular cash distributions.
Extreme concentration risk exists, with the top two holdings AMZN and TSLA accounting for over 41% of the fund's assets.

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