Best Defensive ETFs to Protect Your Portfolio

The best defensive ETFs can help ease investors' worries about volatility across the stock and bond markets.

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The best defensive ETFs are ideal for investors seeking out safety as Treasury yields hover near their highest levels in nearly two decades and stocks struggle in reaction.

And with higher interest rates driving up costs for consumers and businesses and a possible recession on the horizon, those who haven't already reallocated their portfolio towards more defensive investments should certainly consider it.

It's worth admitting that over the very long term, stocks always recover and move higher. So, one way to get through volatility on Wall Street is to simply refuse to look at stock quotes for a few weeks or months and hope things look better on the other side. But long-term investors worried about the outlook on Wall Street can also find relief in defensive ETFs, which help provide some cover in an uncertain market environment. 

To come up with this list of the best ETFs with defensive qualities to buy, we looked at products that all offer different strategies, but share a prioritization of stability over aggressive profit-making strategies.

In a sunny economic environment where start-ups are booming and everyone is spending freely, these kinds of investments often lag behind. But when the storm clouds roll in and everyone runs for cover, it's these defensive ETFs that really hold their own.

As Kiplinger contributor Mark Hake writes in his feature on the best defensive stocks, "It's often the case that these companies are boring. But they are profitable and can keep growing even when economic conditions are rough. In any event, they have a long history of generating good profit margins and cash flow during a variety of economic cycles."

Of course, there's no guarantee that all the forecasts of doom and gloom will prove warranted. As always, each individual should always do their own research, and invest based on your personal investing goals and strategy. But if you're leaning toward this less-risky approach to stocks and bonds, these defensive ETFs could be worth considering.


Data is as of January 16. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.   

Jeff Reeves
Contributing Writer,

Jeff Reeves writes about equity markets and exchange-traded funds for Kiplinger. A veteran journalist with extensive capital markets experience, Jeff has written about Wall Street and investing since 2008. His work has appeared in numerous respected finance outlets, including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today and CNN Money.