XLP vs RSPS: Which Consumer Staples ETF Fits Your Portfolio? A Deep Dive Into Fees, Holdings, and Risk Profiles

The Core Trade-Off: Low Costs vs. Diversification

When selecting a consumer staples ETF, investors face a fundamental choice between two philosophies. XLP (State Street Consumer Staples Select Sector SPDR ETF) prioritizes affordability and scale, while RSPS (Invesco S&P 500 Equal Weight Consumer Staples ETF) champions broader diversification. Both track the U.S. consumer defensive sector—the space devoted to essential products like groceries, household goods, and personal care—but they reach this goal through distinctly different portfolio construction methods.

XLP employs a market-cap-weighted structure, meaning its allocation mirrors the sector’s natural hierarchy: the largest companies command the largest positions. RSPS takes the opposite approach with equal-weighting, giving every holding the same percentage stake regardless of company size. This philosophical difference ripples through nearly every metric investors should consider.

Comparing the Numbers: Cost, Size, and Initial Performance

The fee advantage belongs decisively to XLP. Its expense ratio of 0.08% dwarfs RSPS’s 0.40%—a five-fold difference that compounds dramatically over time. On a $10,000 investment, you’d pay just $8 annually with XLP versus $40 with RSPS. Over a 20-year investment horizon, this gap could accumulate to thousands of dollars in unnecessary fees.

Scale reinforces XLP’s dominance. Managing $15.5 billion in assets under management (AUM) compared to RSPS’s $236.2 million, XLP offers superior liquidity, tighter bid-ask spreads, and more established institutional infrastructure. For retail investors concerned about execution quality when buying or selling, this matters.

On dividend income, the funds are nearly indistinguishable. XLP yields 2.67% while RSPS delivers 2.75%—effectively equivalent for most investors.

Looking at the trailing 12-month returns as of mid-December 2025, both have struggled: XLP fell 3.19% while RSPS declined 5.05%. Over five years, however, the gap widens meaningfully. A hypothetical $1,000 investment five years ago would have grown to $1,180 with XLP but only $992 with RSPS—a $188 divergence that reflects XLP’s advantage during market cycles favoring large-cap staples.

Inside the Portfolios: Concentration vs. Dispersion

Here’s where the philosophies become tangible. XLP holds 36 stocks but concentrates power in its elite holdings. Walmart, Costco Wholesale, and Procter & Gamble alone represent nearly 30% of assets. This mega-cap tilt reflects the sector’s actual market structure but creates vulnerability: if these giants stumble, XLP stumbles with them.

RSPS spreads its 37 holdings more evenly. Its top three positions—Dollar Tree, Dollar General, and The Estee Lauder Companies—each represent less than 4% of the fund. This distribution reduces single-stock risk and captures more mid-tier staples businesses that might otherwise be overshadowed in a market-cap-weighted index.

The numbers crystallize the trade-off: XLP’s top three holdings comprise 28.61% of assets versus just 9.48% for RSPS. This 19-percentage-point gap means XLP investors are making a conscious bet on sector leaders, while RSPS investors are hedging against concentration risk.

Risk Profile: Volatility, Drawdowns, and the Concentration Paradox

Both funds exhibit low volatility relative to the broader market. Their five-year betas of 0.50 to 0.52 reflect the defensive nature of consumer staples—these stocks move less dramatically than the S&P 500 in both directions.

Maximum drawdowns tell a similar story: XLP experienced a worst-case decline of 16.32% over five years, while RSPS saw 18.61%. The difference, though modest in percentage terms, reflects the concentration effect. When sector leaders face headwinds (think inflation pressures on retailers), XLP’s heavy weighting to these names amplifies the damage. Conversely, when large-cap staples rally, XLP captures more upside.

RSPS’s equal-weight structure provides some cushion against mega-cap weakness but introduces a different risk: exposure to lower-quality mid-tier names that might lag during market stress. Equal-weighting also means you’re perpetually holding smaller, less liquid stocks alongside trillion-dollar pillars—a mismatch some investors find inefficient.

The Long Game: How Fees Compound

For passive investors with 20+ year horizons, fee structure becomes decisive. The 0.32% annual difference between XLP and RSPS might sound trivial, but it’s relentless. On $50,000 invested, you’d pay $160 per year extra with RSPS. Over 20 years with 6% annual returns, this seemingly small gap compounds to roughly $9,000 in foregone growth—the power of expense ratios working against you silently.

XLP’s 27-year track record also matters. Institutional investors have stress-tested this fund through multiple market cycles, giving it a proven operational track record that RSPS cannot yet match.

Making Your Choice: Investor Profiles

Choose XLP if you: prioritize cost efficiency, want proven scale and liquidity, believe mega-cap staples leaders will outperform the broader sector, and have a long time horizon where fees compound. The 0.08% expense ratio is difficult to justify passing up.

Choose RSPS if you: specifically want exposure to mid-sized staples businesses, are uncomfortable with the concentration risk in XLP’s top three holdings, believe smaller staples names offer better value, and have conviction that equal-weighted approaches will outperform over your investment horizon. The diversification may justify the higher fees for disciplined investors.

Both funds deliver exposure to essential consumer staples—a sector that typically holds up during recessions because people continue buying groceries and household necessities. The choice ultimately depends on whether you want to own the entire league (RSPS’s approach) or just the starting lineup (XLP’s tilt toward leaders).

Quick Reference Metrics

What “Staple Meaning” Matters Here: Consumer staples refers to products considered essential for daily living—food, beverages, cleaning supplies, personal hygiene items. These sectors are called “defensive” because demand remains relatively stable regardless of economic conditions. Both XLP and RSPS provide exposure to this staple meaning of consumer essentials, though with different portfolio structures.