3 Defensive ETFs for Current Volatility Find the safe harbor for your portfolio.

 

3 Defensive ETFs for Current Volatility

Find the Safe Harbor for Your Portfolio

With market volatility rearing its head once again—thanks to a combination of geopolitical tensions, interest rate uncertainty, and uneven economic data—many investors are seeking stability without pulling out of the market entirely. The answer? Defensive ETFs. These funds offer exposure to sectors or strategies that tend to hold up well when the broader market is under pressure.

Whether you're a seasoned investor looking to de-risk or a conservative newcomer trying to stay the course, here are three defensive ETFs that provide a safe harbor in stormy seas.

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1. Utilities Select Sector SPDR Fund (XLU)

Why it’s defensive:
The utility sector is a classic safe haven. Demand for electricity, water, and gas remains steady regardless of the economic cycle. These companies also tend to offer reliable dividends, which can cushion a portfolio during downturns.

Highlights:

• Dividend yield: ~3.3%

• Top holdings: NextEra Energy, Southern Company, Dominion Energy

• Expense ratio: 0.10%

Investor takeaway:
XLU offers pure-play exposure to U.S. utilities. It's a low-volatility option for investors who want steady income and insulation from economic swings.

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2. iShares U.S. Healthcare ETF (IYH)

Why it’s defensive:
Healthcare is another sector with inelastic demand. People need medical care regardless of market conditions, and the sector includes a mix of pharmaceuticals, insurers, and biotech firms with long-term growth potential.

Highlights:

• Dividend yield: ~1.2%

• Top holdings: Johnson & Johnson, Pfizer, Merck, UnitedHealth Group

• Expense ratio: 0.39%

Investor takeaway:
IYH offers diversified exposure across the healthcare landscape. While slightly more volatile than utilities, the sector is resilient and driven by demographic tailwinds like aging populations.

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3. Invesco S&P 500 Low Volatility ETF (SPLV)

Why it’s defensive:
Instead of focusing on sectors, SPLV targets the 100 least volatile stocks in the S&P 500. This strategy tends to produce a smoother ride with fewer drawdowns during periods of high market stress.

Highlights:

• Dividend yield: ~2.6%

• Top holdings: PepsiCo, Johnson & Johnson, Procter & Gamble

• Expense ratio: 0.25%

Investor takeaway:
SPLV is a great choice for those looking to stay broadly diversified across sectors while dialing down portfolio risk.

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Final Thoughts

While no investment is entirely risk-free, these defensive ETFs offer stability, steady income, and sector strength that can help your portfolio weather the current storm. As always, consider your personal risk tolerance, time horizon, and financial goals when making allocation decisions.

In today’s turbulent market, defense might just be your best offense.