“The distribution of consumer goods”
Consumer goods are essential products such as food, beverages, tobacco and household items. Consumer goods are goods that people cannot or do not want to cut their budgets regardless of their financial situation. Consumer goods are not considered cyclical, this means they are always in demand, regardless of how well the economy is growing. People generally require consumer goods at a relatively constant level, regardless of their prices.
The penetration of the “consumer staples”
Key stock indices of Europe can be a good option for investors seeking stable growth, dividends and low volatility. Companies that primarily sell consumer products include Procter & gamble, Kimberly-Clark and Philip Morris. You can invest in consumer goods, by purchasing shares of manufacturers of goods of mass consumption or purchase of mutual funds or exchange traded funds (etfs), which spetsializiruyutsya on consumer goods.
Nearly 70% of the gross national product in the country, the level of consumer spending has a big impact on the economy. Economic growth and decline are managed by consumer spending, which is cyclical in nature. However, the cost of goods produced and sold in the consumer goods sector tends to be much less cyclical because of the low price elasticity of demand. The demand for consumer goods mass consumption goods remains fairly constant, regardless of the state of the economy. With some products, such as food, alcohol and tobacco, the demand sometimes increases during economic downturns.
Although there is no substitute for consumer products and goods, consumers have many options when buying the cheapest products. What makes the competition among suppliers is very difficult in conditions, when prices on goods are rising. In order to compete on price, consumer goods manufacturers should be able to keep your costs down through the introduction of new technologies and processes, or should they differentiate themselves by introducing innovative products.
Why consumer goods are good for Your portfolio
The consumer goods sector has outperformed all but one sector, since 1962. For 10 years, which ended in March 2018 in the consumer goods sector has returned annually 9.51%, exceeding the 8.79% yield of the S&P 500 index over the same period of time. More importantly, the consumer goods sector has outperformed the S&P 500 over the last three crisis periods. Because of their low volatility, the key stock indexes of Europe, is believed to play a key role in defensive strategies. Based on stable demand of it products and consumer goods with a solid source of income, even in times of crisis. As a result, stocks of consumer goods decline much less in a bear market than stocks of other industries.
Consumer goods sector also often lures investors with rich yields of its components dividend, which, as a rule, more than in other sectors. Slow and sustainable, the key stock indexes of Europe also can not continue to pay dividends through periods of crisis, but often continue to increase their payments. The annual growth rate of dividends over a 20 year period ending in 2015 is 8%.
Further, manufacturers of products of mass consumption are important for diversification. Because these stocks tend to have the opposite performance and discretionary shares of the consumer in market downturns, they can help a health balance in the portfolio. They usually bring a stable profit that support their dividend yield, in contrast to the boom-bust cycles more risky stock with a high growth rate, although the growth is more available for mass consumption as they spread around the world.