Consumer Staples Could Be in for a Fall

[McFurd]

Barrons - 3/25/2017 - Crystal Kim - Which ETFs could be hurt the worst if consumer staples swoon as shoppers buy more fresh foods. Consumer staples aren’t the haven they used to be. The sector’s vulnerability became all too apparent in February, when news leaked that Kraft Heinz was making a play for Unilever. Staples stocks quickly traded down, as the promise of catching Warren Buffett’s eye dissipated. Buffett’s Berkshire Hathaway (ticker: BRKA) and Brazilian conglomerate 3G Capital control Kraft Heinz (KHC). Then Unilever (UL) rejected what would have been the largest food and beverage deal in history, and consumer staples stocks sprang back to life. The sector is up 1.4% since its February swoon, versus a 0.3% gain for the S&P 500. As broad enthusiasm over the “Trump trade” fades, valuations for the financial and materials sectors, which raced higher after the election, look rich, and investors are again seeking safety. “The right approach at the moment is to buy what others have left aside in this run-up and buy what is relatively cheap,” says Bob Smith of Sage Advisory. “That takes you to defensive sectors.” In the past month, a net $477 million of fresh money poured into consumer-staples-sector exchange-traded funds, compared with just $277 million into financial ETFs, according to XTS, an ETF data-tracking firm. Read more @ http://www.barrons.com/articles/consume ... 1490424241