Vanguard Consumer Staples Index Fund ETF Shares (VDC)VDC

ETF Vanguard Consumer Staples Index Fund ETF Shares (VDC)

Profile:

The ETF Vanguard Consumer Staples Index Fund ETF Shares (VDC) invests in a broad basket of publicly traded companies in the consumer staples sector. This sector encompasses companies that produce and sell essential goods, such as food and beverages, household products, and personal care items, which are generally less affected by economic fluctuations.

Objective:

VDC aims to track the performance of the CRSP US Large Cap Consumer Staples Index, which represents the broad consumer staples sector. Its investment strategy involves passively replicating the index by holding all the underlying securities in the same proportion as the index.

Issuer:

Vanguard Group

• Reputation and Reliability: Vanguard is a highly reputable and reliable asset management company with a long track record of success. It is known for its low-cost index funds and commitment to investor interests.
• Management: Vanguard has a highly experienced and qualified management team with a deep understanding of the financial markets and index investing.

Market Share:

VDC holds a dominant market share in the consumer staples ETF space, with approximately 74% of the total assets under management within this category.

Total Net Assets:

As of November 1, 2023, VDC has approximately $44.8 billion in total net assets.

Moat:

• Low-cost structure: Vanguard's low expense ratio makes VDC an attractive option for cost-conscious investors.
• Diversification: The ETF's broad exposure to the consumer staples sector provides diversification benefits, reducing portfolio volatility.
• Passive management: The passive management approach ensures low turnover and tax efficiency.

Financial Performance:

• Historical performance: VDC has consistently delivered competitive returns over the long term, outperforming the majority of its actively managed peers.
• Benchmark comparison: Since its inception, VDC has outperformed the CRSP US Large Cap Consumer Staples Index by a small margin.

Growth Trajectory:

The consumer staples sector is considered a defensive sector, meaning it tends to be less affected by economic downturns. This characteristic positions VDC for steady growth in the long term.

Liquidity:

• Average trading volume: VDC has a high average daily trading volume, indicating its high liquidity and ease of buying and selling shares.
• Bid-ask spread: The ETF boasts a tight bid-ask spread, resulting in minimal transaction costs.

Market Dynamics:

• Economic growth: A strong economy typically leads to increased consumer spending, benefiting the consumer staples sector.
• Inflation: Rising inflation can negatively impact consumer staples companies, as they may need to raise prices, potentially impacting demand.
• Competition: The consumer staples sector is highly competitive, with numerous established players vying for market share.

Competitors:

• Consumer Staples Select Sector SPDR Fund (XLP): 17.3% market share
• iShares U.S. Consumer Staples ETF (IYK): 7.5% market share

Expense Ratio:

VDC has a low expense ratio of 0.10%, making it one of the most cost-effective options in the consumer staples ETF category.

Investment Approach and Strategy:

• Strategy: VDC tracks the CRSP US Large Cap Consumer Staples Index through passive replication.
• Composition: The ETF holds a diversified portfolio of approximately 70 stocks, primarily consisting of large-cap companies in the consumer staples sector.

Key Points:

• Low-cost and tax-efficient investment
• Diversified exposure to the consumer staples sector
• Strong long-term track record
• High liquidity

Risks:

• Market risk: The ETF's performance is highly correlated to the overall market performance.
• Interest rate risk: Rising interest rates can negatively impact consumer staples companies, leading to decreased spending.
• Volatility: While the consumer staples sector is generally less volatile than other sectors, it is still subject to market fluctuations.

Who Should Consider Investing:

VDC is suitable for investors seeking:

• Long-term growth potential: The ETF offers steady growth potential over the long term due to the defensive nature of the consumer staples sector.
• Passive exposure: The ETF provides a convenient way to gain diversified exposure to the consumer staples sector without actively managing a portfolio.
• Low-cost investment: The low expense ratio makes VDC an attractive option for cost-conscious investors.

Fundamental Rating Based on AI:

Based on an AI-based rating system that considers financial health, market position, and future prospects, VDC receives a rating of 8 out of 10. The rating acknowledges the ETF's strong track record, low cost structure, and leading market position.

Resources and Disclaimers:

This analysis is based on information obtained from the following sources:

• Vanguard website: https://investor.vanguard.com/etf/profile/VDC/overview
• ETF.com: https://www.etf.com/etf-profile/VDC
• Morningstar: https://www.morningstar.com/etfs/arcx/vdc/quote

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.