Vanguard Consumer Staples ETF: A Haven for a Slowing Economy

The US economy is expected to slow down with a 1.5% GDP growth in 2026 and inflation at 2.5%. As a result, investors are shifting towards "safer" assets. The Vanguard Consumer Staples ETF is recommended as a stable investment option, while the Vanguard Total Bond Market ETF is suggested for fixed income investors.

The U.S. economy is expected to slow down in 2026, with a projected GDP growth rate of 1.5% and inflation at 2.5% [1]. In response to these economic indicators, investors are shifting towards "safer" assets, seeking stability and lower risk. Two prominent investment options gaining attention are the Vanguard Consumer Staples ETF (VDC) and the Vanguard Total Bond Market ETF (BND).

The Vanguard Consumer Staples ETF (VDC) is designed to provide broad exposure to the consumer staples sector, which includes companies that produce essential goods such as food, beverages, and household items. The ETF, launched on January 26, 2004, has amassed assets over $7.57 billion and seeks to match the performance of the MSCI US Investable Market Consumer Staples 25/50 Index before fees and expenses [2]. With an annual operating expense ratio of 0.09%, VDC offers a cost-effective way for investors to gain diversified exposure to the consumer staples sector. The top holdings include Costco Wholesale Corp (COST), Walmart Inc (WMT), and Procter & Gamble Co (PG), which together account for about 44.87% of total assets under management.

The Vanguard Total Bond Market ETF (BND) provides exposure to a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States. The fund includes government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, with maturities of more than one year [3]. BND has a long-standing reputation for stability and has been a popular choice among fixed income investors seeking low-risk, diversified portfolios.

Investors are also observing strong flows into ETFs, with U.S.-listed ETFs pulling in nearly $25 billion in the week ending August 1, 2025, despite a late-week stumble in the market [4]. This trend underscores the continued interest in ETFs as a convenient and cost-effective way to gain exposure to various asset classes. The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF Trust (SPY) led the way, each raking in between $1.7 billion and $4.8 billion in new assets.

In conclusion, as the U.S. economy slows down, investors are increasingly turning to stable investment options like the Vanguard Consumer Staples ETF (VDC) and the Vanguard Total Bond Market ETF (BND). These ETFs offer diversified exposure to low-risk sectors and fixed income securities, providing a potential hedge against economic uncertainty.

References:
[1] Reuters. "Japan Lower FY2025 GDP Growth Estimate Due to US Tariffs, Nikkei Says." August 5, 2025. https://www.reuters.com/markets/asia/japan-lower-fy2025-gdp-growth-estimate-due-us-tariffs-nikkei-says-2025-08-05/
[2] Yahoo Finance. "Invest in Vanguard Consumer Staples ETF." August 5, 2025. https://finance.yahoo.com/news/invest-vanguard-consumer-staples-etf-102002548.html
[3] Yahoo Finance. "BND." August 5, 2025. https://finance.yahoo.com/quote/BND/
[4] ETF.com. "25B Added to ETF Assets Last Week Despite Friday's Selloff." August 5, 2025. https://www.etf.com/sections/weekly-etf-flows/25b-added-etf-assets-last-week-despite-friday-selloff