Food for thought: Consumer staples to fortify your portfolio in recession

AMID last year’s drawdowns and volatility in the US equity market, the consumer staples sector stands out for its resilience. The S&P 500 Consumer Staples Index has fallen just 3 per cent (in US-dollar terms), compared to the broader index’s fall of 14 per cent since the start of 2022.

As we move into Q2 2023, we believe that US stocks continue to face a bumpy ride ahead, with a recession increasingly likely. But investors can continue to look towards defensive names within the consumer staples sector to buffer their portfolios against a recession.

The consumer staples sector differentiates itself from other sector peers in a recessionary environment due to its earnings resiliency. Many goods in the sector tend to have low product elasticity, and are non-cyclical since they are regarded as essential for daily life.