In the MSCI U.S. sector-index snapshots reviewed here, consumer staples had lower reported volatility and a shallower historical maximum drawdown than information technology; information technology had higher Sharpe ratios over the listed periods. That is a historical trade-off, not proof that staples are safe or that technology will keep outperforming. To compare the sectors fairly, first define the benchmarks, then compare matching risk and return measures over the same period.
What counts as consumer staples or technology?
Consumer staples and information technology are sector classifications, not descriptions of every company an investor might associate with those labels. This comparison uses the MSCI USA Consumer Staples Index and MSCI USA Information Technology Index. Both cover U.S. large- and mid-cap companies and use the GICS classification framework, making them reasonably aligned for a sector comparison. The snapshots are not perfectly simultaneous: staples data are as of August 31, 2026, and information technology data are as of September 30, 2026. GICS classifications are maintained through reviews by S&P Dow Jones Indices and MSCI; see S&P Dow Jones Indices’ GICS overview.
“Technology stocks” here means GICS Information Technology, not every company informally called a tech company. Indexes also differ from a basket of individual stocks: the index’s rules determine which companies are included and how they are weighted.
What the two MSCI index snapshots show
The figures below are from MSCI index profiles. Standard deviation and Sharpe ratios are annualized statistics based on monthly net total returns. Maximum drawdown is the worst peak-to-trough loss in each index’s available history, not a loss measured over the same fixed 3-, 5-, or 10-year windows as the volatility figures.
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| Measure | MSCI USA Consumer Staples | MSCI USA Information Technology |
|---|---|---|
| Profile data as of | August 31, 2026 | September 30, 2026 |
| Annualized standard deviation, 3 years | 12.15% | 21.33% |
| Annualized standard deviation, 5 years | 13.64% | 23.34% |
| Annualized standard deviation, 10 years | 13.14% | 20.81% |
| Sharpe ratio, 3 / 5 / 10 years | 0.38 / 0.26 / 0.42 | 1.36 / 0.81 / 1.06 |
| Maximum drawdown in available history | 33.54%, December 31, 1998–March 31, 2000 | 81.10%, March 31, 2000–October 9, 2002 |
| P/E | 23.67 | 38.36 |
| Forward P/E | 21.76 | 21.31 |
| Dividend yield | 2.41% | 0.51% |
| Number of constituents | 30 | 84 |
| Largest-holdings concentration | Not stated by MSCI in the cited profile data. | Not stated by MSCI in the cited profile data. |
Sources: MSCI USA Consumer Staples Index profile (data as of August 31, 2026) and MSCI USA Information Technology Index profile (data as of September 30, 2026). Figures are specific to these indexes, their methodologies, and their stated dates.
How to interpret the risk measures
Volatility measures variation, not the size of every possible loss
Standard deviation estimates how widely returns varied around their average over a period. In these snapshots, the technology index had higher annualized standard deviation at each of the three matched lookbacks. That indicates greater historical return variation; it does not predict the size or direction of future returns, and it does not capture every kind of risk.
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Drawdown makes severe losses visible
Maximum drawdown measures a peak-to-trough decline. The historical worst drawdown reported for the technology index was substantially deeper than the staples index’s. These episodes occurred in different periods, and the statistic uses each index’s available history, so it is not a controlled same-period comparison. It nevertheless illustrates why investors should consider how much loss they might need to tolerate, not just typical fluctuations.
Sharpe ratio is risk-adjusted historical performance, not a safety score
The technology index had higher reported Sharpe ratios over the listed 3-, 5-, and 10-year horizons. A higher Sharpe ratio indicates more historical return per unit of measured volatility under the calculation’s assumptions. It does not cancel out higher absolute volatility or the deeper historical drawdown. MSCI’s Sharpe calculation uses EMMI EURIBOR 1M as the risk-free-rate input from September 1, 2021, and ICE LIBOR 1M before that date.
Returns need matching benchmarks and periods
A single headline return can mislead if it uses a different index, time window, return type, or measurement date. For a direct sector comparison, match geography, capitalization range, currency, total-return treatment, lookback period, and end date as closely as possible. The risk figures above use monthly net total returns; they should not be casually compared with a price-only return or a figure from a different index.
The supplied MSCI profile statistics establish the risk, valuation, yield, and constituent-count comparisons above, but do not provide a matched set of annualized absolute returns for both indexes in the stated facts. The Sharpe ratios provide historical risk-adjusted context, not a substitute for a comparable return series. For example, a June 2026 SEC filing for the Nasdaq-100 Technology Sector Index reported annualized returns of 69.88% for one year, 32.46% for three years, 17.48% for five years, and 17.64% since January 4, 2021, through June 1, 2026. Those figures use a different index construction and do not supply a corresponding consumer-staples comparison, so they cannot establish which of these two MSCI sectors had better returns. The filing also cautions against treating historical performance as an indication of future results; see the June 2026 Nasdaq-100 Technology Sector Index supplement.
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Valuation, income, and concentration tell different stories
At their respective snapshot dates, the technology index had a higher trailing P/E than staples, while the forward P/E figures were close. P/E ratios depend on index composition and earnings definitions; a higher multiple does not by itself prove that a sector is overvalued or forecast weaker returns. The snapshots also show a higher dividend yield for consumer staples. Yield is only one component of total return and can change as prices and distributions change.
The profile counts show 30 constituents in the staples index and 84 in information technology, but constituent count alone does not reveal how much the largest companies dominate. MSCI’s cited profile data do not state the largest-holdings concentration figures, so no conclusion about relative concentration should be drawn from the counts alone. Holdings and weights can change over time.
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How to use the comparison in a portfolio decision
- Set the objective and time horizon. Decide whether the allocation is intended for growth, income, or another role, and how much short-term loss you could withstand. Both indexes represent equities and can lose substantial value.
- Choose comparable evidence. Use sector indexes or funds with clearly identified market coverage, currency, return type, and dates. Compare matched periods rather than selecting whichever window favors one sector.
- Assess more than one risk dimension. Consider volatility, drawdown, valuation, yield, and the portfolio’s existing exposure. A sector index’s past behavior is not a guarantee of its future risk.
- Consider diversification beyond sectors. A fund holding several companies within one industry sector may still be narrowly focused. The SEC notes that a mutual fund investment does not necessarily provide instant diversification if it focuses on one sector. Its guidance explains diversification across asset categories and sectors: Beginners’ Guide to Asset Allocation, Diversification, and Rebalancing and Asset Allocation and Diversification.
Sector indexes are not individual-stock forecasts. The SEC explains that owning stock means owning a share of a company and that equity investments can lose value; see Investor.gov’s Stocks FAQs. A choice between two sectors is only one part of an investment plan, not a complete diversification strategy.
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