Invesco S&P SmallCap Consumer Staples ETF

PSCC

Market cap $37.1M

The U.S. government shut down on Oct. 1, 2025, as last-minute talks failed. ETFs like TLT, XLV and PSCC hog attention.

Consumer spending has been a strong point in the economy, but recent headwinds are building. The consumer discretionary sector has felt pressure due to recessionary concerns on top of pricing inflation from potential tariffs.

PSCC holds the 25 Consumer Staples stocks in the S&P SmallCap 600 Index. Its expense ratio is 0.29% and the ETF has $48 million in assets under management. Despite its unpopularity, PSCC has outperformed XLP, its large-cap counterpart, since its inception in April 2010. However, it's struggled since 2024, which I attribute to its unappealing fundamentals. Namely, PSCC's growth rates have dried up, and its margin of safety is much lower than XLP's due to mid-single-digit net and free cash flow margins.

If the promised Trump tariffs take effect soon, inflation could go up and leave a dent on consumers' buying power.

To date, 145 of the 199 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2024, representing 73% of the index. The blended revenue growth estimate for the 199 companies in this index is 3.5% for Q2 2024. Home Depot reported better-than-expected Q2 earnings and revenue.

Invesco S&P SmallCap Consumer Staples ETF offers defensive small-cap exposure to the consumer staples sector. The PSCC ETF portfolio consists of 31 companies, primarily in the food and personal care products industries.

PSCC is a passively managed investment vehicle tracking SMID consumer staples names from the S&P 600. Heavy in mid-caps, PSCC has a value tilt, as illustrated by its levered FCF yield and EBITDA/Enterprise Value. At the same time, its quality is not perfect, and exposure to the growth factor is too small.

While consumer prices may have gone up in December, wholesale prices fell, much to the surprise of many economists. And this decline in wholesale prices should impact spending on consumer staples.

So far this month, Wall Street remained almost flat. But a few ETF areas have been hovering at around a month-high and have been still gaining strength.