In a tough bear market, investors want to find sectors that will help them preserve their capital. Defensive industries like food and other consumer staples provide some protection against an economic downturn.

The PowerShares Dynamic Food & Beverage ETF (PBJ), which invests in a variety of food and beverage companies, was marked down along with most other funds in 2008, but not nearly as much as the overall market. So far this year, Dynamic Food & Beverage has fallen roughly 5%. But consumers' increased likelihood of staying close to home provides a strong argument for taking a bite of this food-focused fund.

Fund facts

  • 2008 return: (21.8%)
  • Expense ratio: 0.60%
  • Net assets: $84 million
  • Top 5 holdings:
    - Kroger (NYSE:KR)
    - General Mills (NYSE:GIS)
    - McDonald's (NYSE:MCD)
    - PepsiCo (NYSE:PEP)
    - Kellogg (NYSE:K)

Fund prospects and risks
Food stocks have been billed as a safe haven. While many such companies nonetheless suffered in last year's market crash, McDonald's was one of the only Dow winners in 2008. No matter how bad the economy gets, people have to eat. While restaurant chains like Red Robin Gourmet Burgers (NASDAQ:RRGB) and Brinker International (NYSE:EAT) have seen big losses, some other company in the industry must surely pick up the slack when people eat out less.

One big trend last year was food price inflation. Although oil prices have reversed their gains, food prices are still expected to increase 3.5%-4.5% in 2009 according to the USDA -- just 1% lower than in 2008. Consumers therefore should not expect much relief at the grocery store or restaurants, since these businesses absorbed cost increases in the past and are still working them into their price structure. With consumers tightening their belts pretty much everywhere, food will likely be one of the last places to lose out.

Portfolio fit?
With 30 holdings and a sector focus, this fund probably won't be appetizing for every investor, even with its creative ticker symbol. But if you're looking for ways to protect against continued weakness in the overall economy, Dynamic Food & Beverage might provide you with a tasty and reassuring snack during these difficult times.

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Fool contributor Zoe Van Schyndel now lives in the Seattle area, where she enjoys the coffee and natural wonders. She does not own any of the funds or securities mentioned in this article. PepsiCo is a Motley Fool Income Investor pick. Try any of our Foolish newsletter services free for 30 days. The Motley Fool's disclosure policy could go for some mac & cheese right about now.