VDC vs KXI: Two Paths to Consumer Staples Exposure

The choice between the Vanguard Consumer Staples ETF (VDC) and the iShares Global Consumer Staples ETF (KXI) fundamentally depends on whether you prioritize cost efficiency or geographic diversification when investing in consumer staples. Both funds provide exposure to companies producing essential products resilient across economic cycles, but they operate with distinctly different philosophies and fee structures.

Cost Efficiency Gap: Why Expense Ratios Matter in Consumer Staples Investing

The most striking distinction between these two consumer staples funds lies in their cost structures. VDC charges just 0.09% annually, while KXI’s expense ratio stands at 0.39%—a 0.3 percentage point difference that may seem modest but compounds significantly over decades.

Consider this: on an $100,000 investment over 20 years, VDC’s lower fee could save investors roughly $15,000 to $20,000 in cumulative costs, assuming similar returns. For consumer staples funds that tend to deliver steady, market-matching performance, this cost differential becomes a primary return driver. VDC’s issuer, Vanguard, is known for its low-cost index approach, while iShares (under BlackRock) offers more sophisticated active management—though both funds track their respective indexes closely.

Both funds maintain similar dividend yields around 2.26% (VDC) and 2.30% (KXI), offering comparable income generation despite their cost differences.

Five-Year Returns Comparison: VDC’s Outperformance in Consumer Staples

The performance picture reveals interesting nuances. Over the trailing 12 months (as of January 16, 2026), KXI edged ahead with 14.8% returns versus VDC’s 9.0%. However, this shorter-term advantage reverses when examining longer time horizons.

Over the past five years, VDC’s outperformance becomes apparent. A hypothetical $1,000 invested in VDC five years ago would have grown to approximately $1,481, compared to $1,322 in KXI—a meaningful gap. More impressively, since 2006, VDC has delivered annualized returns of 9.5% versus KXI’s 7.6%, showcasing two decades of consistent outperformance.

Both funds exhibit similar risk profiles, with beta values of 0.55 against the S&P 500, indicating they’re less volatile than the broader market. Maximum drawdowns over five years were comparable—VDC at 16.55% and KXI at 17.43%—suggesting neither fund significantly reduces downside risk relative to the other.

Portfolio Composition and Geographic Exposure

The structural differences between these consumer staples funds reveal their distinct approaches. VDC heavily concentrates on U.S. markets, with 98% of holdings classified as consumer defensive stocks—companies selling staple goods from groceries to personal care products. Its top three holdings are Walmart, Costco Wholesale, and Procter & Gamble.

KXI, by contrast, invests across 96 companies globally, maintaining 97% consumer defensive allocation with 3% in consumer cyclical stocks. Its largest positions are Walmart, Costco Wholesale, and Philip Morris International—a notably more internationally-oriented set that reflects its global mandate.

The geographic split reveals KXI’s diversification strategy: just 60% U.S. exposure, balanced by 12% United Kingdom, 6% Japan, and 5% each in Switzerland and France. For investors seeking explicit international consumer staples exposure, KXI’s global reach provides direct market participation across developed economies.

However, VDC’s U.S.-focused portfolio carries subtle global diversification often overlooked. Many of its core holdings generate substantial revenue internationally through operations abroad, providing what might be called “hidden” global exposure without explicit international holdings. This structural advantage partially explains why VDC’s long-term returns have exceeded KXI despite holding remarkably similar top-five positions in both funds.

The Dividend Story and Current Yields

Income-focused investors will find minimal differentiation between these funds. VDC yields 2.26% annually while KXI offers 2.30%, a difference of just four basis points. Both funds focus on consumer staples precisely because these companies tend to maintain dividend-paying operations, making them attractive for income strategies.

With assets under management of $8.5 billion (VDC) versus $884.8 million (KXI), VDC’s significantly larger size provides superior liquidity and tighter bid-ask spreads for traders, though both funds trade actively enough for retail investors to execute trades without friction.

Which Consumer Staples ETF Fits Your Investment Goals?

The selection between VDC and KXI ultimately depends on your investment priorities. For cost-conscious, long-term investors: VDC’s 0.09% expense ratio and two decades of outperformance make it compelling. The lower fees have meaningfully contributed to superior returns even when holding nearly identical securities, and this advantage will likely persist.

For international diversification seekers: KXI’s explicit global weighting across developed markets justifies its higher fee for investors uncomfortable with the “hidden” international exposure embedded in VDC’s U.S.-listed companies. If you specifically want direct exposure to U.K., Japanese, and European consumer staples producers, KXI provides this without holding U.S. companies as a proxy for international growth.

For most investors: VDC appears the superior choice. Both funds trade at similar valuations (approximately 25 times earnings), maintain low leverage, exhibit comparable dividend yields, and hold nearly identical core positions. In situations where two investment vehicles are functionally similar, cost efficiency becomes the decisive factor. VDC’s much lower expense ratio, combined with its demonstrable outperformance over 20 years, suggests it represents better value for most consumer staples allocations.

The debate between these funds isn’t dramatically different philosophies but rather two efficient implementations of consumer staples exposure with meaningfully different fee structures. That difference alone may guide your decision in this consumer staples comparison.