A previous article described a profitable trading strategy with the stocks of the Technology Select Sector SPDR Fund (XLK). Similarly, the consumer staple stocks of the S&P 500 can be profitably employed to provide good returns with less risk.
Emulating the Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP).
The analysis was performed on the on-line portfolio simulation platform Portfolio 123.
Since historic holdings of (XLP) are not published a custom universe was constructed from the consumer non-cyclical stocks of FactSet’s Revere Business Industry Classifications System of the S&P 500 index.
The rule to set up the custom universe “S&P 500 (STAPLE)” in Portfolio 123 is: RBICS(NONCYCLICAL).
The current holdings (44 stocks) of S&P 500 (STAPLE) are similar, but not identical to the current holdings of XLK (32 stocks).
Backtesting of S&P 500 (STAPLE) universe
A backtest from 1/2/2009 to 9/23/2020 with all the cap-weighted stocks in the custom universe