A consumer staples ETF with no Walmart beat XLP this year

iShares U.S. Consumer Staples ETF, IYK, rose more in share price this year than the biggest consumer staples fund, and it owns no Walmart, Costco or Target.

IYK rose 18.7% through Nov. 10, not counting dividends. It charges 0.37% and held $1.54 billion that day. State Street Consumer Staples Select Sector SPDR ETF, XLP, rose 17.2%. It charges 0.08% and held $14.96 billion, and it is the largest broad consumer staples ETF. The gap is 1.5 percentage points.

Walmart's own share price rose 12.7% over the same stretch. It lagged the fund that holds it as the largest position. On Nov. 10, State Street reported Walmart at 11.18% of XLP and Costco at 9.45%, a combined 20.6%. Costco's share price rose 23.6%. One store beat the fund. The bigger holding did not.

State Street SPDR S&P 500 ETF, SPY, rose 10.0% over the same stretch.

Vanguard Consumer Staples ETF, VDC, the next largest, held $7.36 billion on Sept. 30 and charges 0.09%. It rose 17.6%. Fidelity MSCI Consumer Staples Index ETF, FSTA, which tracks the MSCI USA IMI Consumer Staples 25/50 Index and charges 0.084%, rose 17.7%. Invesco S&P 500 Equal Weight Consumer Staples ETF, RSPS, owns the S&P 500 staples stocks and gives every one the same weight. It did not keep up.

Share-price changes run from the last close of 2025 through Nov. 10 and leave out dividends. KXI holds staples companies worldwide. The others are US funds.

Why iShares owns no Walmart

XLP tracks the Consumer Staples Select Sector Index, a slice of the S&P 500. State Street says the index includes consumer staples distribution and retail, household products, food, beverages, tobacco and personal care. On Nov. 10, distribution and retail was 34% of the fund. Target, in that group, was 4.14%. Target's share price is up 65.5% this year. IYK does not hold it, and still finished ahead.

IYK tracks the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index. The numbers in that name are a cap, not the reason the stores are missing. iShares says the cap is applied so the index complies with the diversification rules for a regulated investment company: no company above 22.5%, and the companies above 4.5% no more than 45% combined. The prospectus, dated Aug. 31, 2026, says those limits are set at each quarterly rebalance.

The stores are missing because the two classification systems do not put a big-box retailer in the same place. iShares says FTSE Russell's classification puts Walmart, Costco and Target in consumer discretionary, while S&P's puts them in consumer staples. IYK follows the Russell index. XLP follows S&P's.

The missing stores are only half the difference. On Nov. 10, iShares put 13.89% of IYK in a category it labels Health Care Equipment & Services, and 6.4% in consumer staples distribution and retail. On Sept. 30, CVS Health and McKesson were in the top ten. The fund also holds Cardinal Health and Cencora. None of the four is in XLP.

FTSE Russell's definitions, updated in August 2026, include drug-retailing companies in consumer staples: operators of pharmacies, and the wholesalers and distributors that supply them. A holder of IYK owns the brands, and also the companies that move medicine to the pharmacy. A holder of XLP owns the big-box stores and does not own those four.

The two funds had a similar year on different stocks. Coca-Cola's share price rose 38.6%. McKesson's rose 32.0%. Cardinal Health's rose 34.7%. On Sept. 30, Procter & Gamble was 13.63% of IYK, Coca-Cola 13.45% and Philip Morris International 12.02%. On Nov. 10, those three were 7.83%, 7.50% and 6.05% of XLP.

Equal-weight staples trailed XLP

RSPS owns the consumer staples stocks in the S&P 500. XLP draws on that same sector. Invesco's prospectus says the equal-weight index gives each stock the same weight at each quarterly rebalance. A larger company gets no extra share of the fund. The fee is 0.40%.

The share price is up 11.4% this year, 5.8 percentage points behind XLP. The list is the same kind of list. The weights are not. IYK skipped the stores and still gave larger companies a larger share, and it did not trail.

Vanguard's longer list did not change that shape. VDC tracks the MSCI US Investable Market Consumer Staples 25/50 Index, across large, mid-size and small companies. The 25/50 is another diversification cap. MSCI's methodology, from October 2024, says that at each quarterly rebalance no company can exceed 22.5% of the index, so a fund tracking it can meet the US diversification rules for a regulated investment company. The cap has not shrunk the stores. Vanguard's Sept. 30 fact sheet had Walmart at 13.9% and Costco at 12.1%, together 26%, and the ten largest holdings at 66.1%. XLP's ten largest were 63.7% on Nov. 10. Adding smaller companies lengthened the list. It did not cut Walmart and Costco.

FSTA matched that year. A second fund on a broad MSCI staples index, at 0.084%, did not produce a different 2026.

KXI, the global fund, gained 13.5% and charges 0.38%. Holding staples companies outside the United States did not reproduce the US result. It also did not fall as far behind as equal weight. The tight group this year was the US funds that weight by company size.

Procter & Gamble's commodity costs

A similar year was not the same exposure.

On Oct. 22, Procter & Gamble reported the quarter ended Sept. 30, which the company calls the first quarter of fiscal 2027. Organic sales, which leave out currency moves and acquisitions and divestitures, rose 4%. P&G's driver table put volume at 2.4 percentage points, mix at 1.1 and pricing at 0.4.

Core gross margin, gross margin with extra restructuring charges stripped out, fell 150 basis points from a year earlier, or 1.5 percentage points. P&G said higher commodity costs accounted for 140 basis points of that decline, and product reinvestment for another 140, partly offset by 120 basis points of productivity savings. The company now expects about $1.4 billion in after-tax commodity costs for the fiscal year, from raw materials, energy and transportation.

P&G was 7.83% of XLP on Nov. 10. On Sept. 30 it was 13.63% of IYK, the largest holding. A holder of IYK has a much larger stake in a brand owner whose sales grew and whose margin was squeezed by the cost of making the goods. A holder of XLP has more of the stores, including a Target position that ran far ahead of P&G this year, and less of that commodity bill.

The two funds can rise together and still own different things. One gives the largest staples companies, stores included, a larger share of the money. The other gives that larger share to the biggest companies on a list that leaves the stores out and includes brands, tobacco and pharmacy wholesalers. This year both finished ahead of the S&P 500. They do not carry the same exposure to next year's commodity costs.

Three years, a different result

Nothing in the 2026 prices shows that a staples fund needed Walmart and Costco. The three-year prices are a different picture.

Over the three years through Nov. 10, in share price, XLP is up 32.4%. IYK, which does not own the stores, is up 27.6%, 4.8 percentage points behind. RSPS is up 9.4%. VDC is up 36.3%, and FSTA is up 36.3%. SPY is up 72.5%.

Walmart's share price rose 128.7% over those three years. Costco's rose 90.1%.

Over that window, skipping the stores lined up with a lag behind XLP, and refusing to give large companies a larger share lined up with a much wider one. The 2026 result is real. It is not the three-year result. What a staples fund owns, and whether larger companies get a larger share of it, is still what separates the funds.