The Vanguard Consumer Staples ETF (NYSEMKT:VDC) stands out for its low cost and wide sector coverage, while the First Trust Nasdaq Food & Beverage ETF (NASDAQ:FTXG) trades at a higher expense, pays a higher yield and concentrates on food and beverage businesses.

Both funds target the consumer staples space, but VDC casts a wider net across non-discretionary products, while FTXG focuses specifically on food and beverage stocks. This comparison helps clarify whether the additional yield and niche tilt in FTXG offset its higher costs and narrower portfolio.

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-year return represents the total return over the following 12 months.

VDC is significantly more affordable with an expense ratio of 0.09%, while FTXG charges 0.60%. FTXG may appeal to those looking for a higher payout, offering a dividend yield of 2.75% versus VDC’s 2.10%.

FTXG focuses on the food and beverage industry, with just 31 stocks with 91% in consumer defense, 7% in basic materials and 2% in industrials. Its main holdings are PepsiCo, Inc. (NASDAQ:PEP), Archer-Daniels-Midland Company (NYSE: ADM)i Mondelez International, Inc. (NASDAQ:MDLZ). The fund has a track record of 9.4 years. There is no notable peculiarity.

Instead, VDC tracks a broader basket of consumer staples, with 98% in consumer defensive and 2% in consumer cyclicals. Its main actions are Walmart (NASDAQ:WMT), Costco Wholesale Corp. (NASDAQ: COST)i Procter & Gamble Co. (NYSE:PG). With 103 holdings, VDC offers greater diversification across household and personal products, not just food and beverages.

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Both the Vanguard Consumer Staples ETF ( VDC ) and the First Trust Nasdaq Food & Beverage ETF ( FTXG ) offer investors exposure to the stable, income-producing consumer staples sector. The choice comes down to whether you prefer FTXG’s focus on the food and beverage industry or VDC’s broader consumer staples focus.

If you don’t have holdings in the consumer staples industry or want to expand into this area for your portfolio, VDC is a better ETF than FTXG for several reasons.

VDC has a higher one-year yield, a smaller maximum drawdown and a lower expense ratio. It also has substantial assets under management of more than $9 billion compared to FTXG’s much smaller $17.9 billion, giving VDC greater liquidity.

Also, Vanguard’s ETF offers much better diversification, containing more than 100 holdings compared to FTXG’s small basket of 31 stocks. This helps propel VDC during downturns in some stocks or industry segments, while FTXG is more vulnerable.

FTXG is the ETF for investors who want to increase their exposure specifically to the food and beverage sector, and are willing to pay a higher expense ratio for it. The fund also boasts a higher dividend yield. Other than that, VDC is the best choice.

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Robert Izquierdo has positions in PepsiCo and Walmart. The Motley Fool has positions and recommends Costco Wholesale and Walmart. The Motley Fool has one disclosure policy.

Better Consumer Staples ETF: Vanguard’s VDC vs. First Trust’s FTXG was originally published by The Motley Fool