Choosing Between VDC and FSTA: A Deep Dive into Two Consumer Staples ETFs

Understanding the Contenders

The Vanguard Consumer Staples ETF (VDC) and Fidelity MSCI Consumer Staples Index ETF (FSTA) represent two prominent pathways into the defensive consumer staples sector. While they appear nearly interchangeable at first glance, examining their structural differences and performance characteristics reveals important distinctions for investors evaluating which fund fits their portfolio strategy.

The Numbers: How They Compare

Both funds maintain remarkably similar cost structures and income profiles:

The expense ratio differential of just 0.01 percentage points makes cost an essentially irrelevant decision factor. Over a $100,000 investment, this translates to a mere $10 annual difference. Both funds have delivered nearly identical returns, with $1,000 invested five years ago growing to approximately $1,250 in either case.

Portfolio Composition: More Alike Than Different

VDC’s 107-stock portfolio maintains concentrated exposure to consumer defensive equities, with Walmart, Costco Wholesale, and Procter & Gamble anchoring the holdings. The fund allocates nearly its entire portfolio to consumer staples while maintaining minimal positions in consumer cyclicals and industrials.

FSTA takes a parallel approach with 95 stocks, tracking the MSCI USA IMI Consumer Staples 25/50 Index. Its top three positions mirror VDC’s, creating nearly identical sector tilts. Both funds avoid complications such as leverage or ESG-focused overlays, maintaining straightforward index-tracking methodology.

The Critical Differences Worth Noting

Despite surface-level similarities, several factors differentiate these funds:

Track Record and Scale: VDC launched in 2004 and has accumulated $7.4 billion in assets, while FSTA began operating in 2013 with $1.3 billion under management. This 9-year head start gives VDC a longer performance history—the fund’s compound annual growth rate stands at 8.7% versus FSTA’s 8.5% since the latter’s inception. For investors prioritizing operational longevity and proven stability, VDC’s extended history carries value.

Liquidity Positioning: Although both funds maintain sufficient AUM to prevent liquidity concerns, VDC’s larger asset base potentially offers tighter bid-ask spreads and execution efficiency for larger trades. Neither fund presents practical trading obstacles for typical retail investors.

Performance Equivalence: On identical time horizons, the funds deliver virtually matching returns. Their shared 0.56 beta signals equivalent sensitivity to market movements, and the 5-year maximum drawdown separation of less than 1 percentage point suggests comparable downside protection during market stress periods.

What Investors Should Consider

The fundamental question becomes: do marginal differences justify selection? For most investors, the answer leans toward immateriality. Both funds represent solid defensive equity vehicles suitable for portfolio diversification into essential consumer goods producers.

However, specific situations warrant consideration:

• New investors or those prioritizing proven track records may find VDC’s operational history since 2004 more reassuring, particularly for long-term buy-and-hold strategies.
• Cost-conscious investors will appreciate FSTA’s marginally lower expense ratio, though the practical impact remains negligible.
• Liquidity-intensive traders might prefer VDC’s superior asset base, though this distinction affects only very large institutional positions.

The Bottom Line

These two exchange-traded funds occupy nearly identical market spaces within the consumer staples sector. Selecting between them resembles choosing between two quality vehicles with identical fuel economy and trunk space—both accomplish the objective effectively. Investors comfortable with either fund’s issuer (Vanguard or Fidelity) can confidently build defensive equity positions, knowing that performance expectations and cost burdens will align across either choice. The decision ultimately hinges on personal preference for fund provider, historical loyalty, or platform-specific advantages rather than fundamental performance differentiation.