The 12 Best Bear Market ETFs to Buy Now

Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.

two brown bears fighting
(Image credit: Getty Images)

Investors worried that the current bear market will get worse again before turning into a bull market can find plenty of protection among exchange-traded funds (ETFs). In fact, these bear market ETFs might very well be your best bet. 

Individual stocks can carry a lot of risk, especially in a downturn. You could diversify via mutual funds, but they don't have much breadth of tactical options. But if you browse through some of the best bear market ETFs geared toward staving off downturn, you're sure to find a bounty of options that mesh well with your investing style and risk profile.

And make no mistake: Many analysts and strategists are calling for a continuation of the bear market – and more economic tumult – in 2023.

"The Federal Reserve remains committed to taming inflation by keeping monetary policy tight, as Jerome Powell emphasized in his press conference, which is not great news for the stock market and supports the bear market continuing into 2023," says James Demmert, chief investment officer of Main Street Research. "The Fed is trying to engineer a soft economic landing that in our view has a high likelihood of failing and causing a recession in 2023. … Stock indexes are vulnerable at current levels."

Thing is, no two bear markets are the same. Yes, certain sectors historically perform better than others – and we would recommend being in a couple of those sectors (more on that in a moment). But you'd be surprised; certain cyclical always seem to keep up with, or outright beat, purely defensive plays. Energy, for instance, is the best sector of this current bear market by a country mile, up 52% on a total-return basis (price plus dividends) vs. an 18% decline for the S&P 500. Communication services and technology were among the top performers in the COVID bear market. Energy and consumer discretionary stocks were among the top four sectors during the Great Recession.

In short, there's no guaranteed hedge against a bear market. If there was, everyone would invest in it. But you can learn about what options are available to you so you can make the best decision for whatever environment you face. Some ETFs tend to work well in many bear markets, while others need specific conditions to thrive.

With all that said, here are a dozen of the best bear market ETFs. These funds span a number of tactics, from low-volatility stocks to bonds to commodities and more, and most have already outperformed in the current bear market.


Data is as of July 12. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Kyle Woodley

Kyle Woodley is the Editor-in-Chief of WealthUp, a site dedicated to improving the personal finances and financial literacy of people of all ages. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.

Kyle was previously the Senior Investing Editor for, and the Managing Editor for before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 

You can check out his thoughts on the markets (and more) at @KyleWoodley.