The 6 Safest Vanguard Funds to Own in a Bear Market

Batten the hatches for continued market tumult without eating high fees with these six Vanguard ETFs and mutual funds.

Vanguard logo
(Image credit: Courtesy of Vanguard)

Vanguard funds are known as practical tools for the buy-and-hold-forever crowd. Their straightforward strategies, broad portfolios, and generally low costs are conducive to investors who want to sit back and let compounding do the work for a decade or two. But in a pinch, the safest Vanguard funds can also be used to play a little defense – something investors could very well use in the coming year.

The current stock-market downturn is more persistent than the average bear. The S&P 500 has been in bear-market territory since Jan. 3, 2022, giving it a little more longevity than the 330 days the typical bear market lasts. Depending on economic conditions this year – especially if the U.S. does fall into the recession that many experts predict – it could last well into 2023.

"The equity market is currently not a good value proposition unless you believe yields will decline dramatically and earnings will hold up, both of which are significantly unlikely," says José Torres, senior economist at Interactive Brokers. "The S&P 500 is likely to reach a low of around 3,100 as earnings per share (EPS) sink to $206 and the P/E drops to 15."

If you're looking to seek out shelter, here are six of the safest Vanguard funds to own in a bear market. These exchange-traded funds (ETFs) and mutual funds represent some of the most useful defensive sectors and strategies – complete with Vanguard's below-average expenses. And when applicable, we'll let you know when these portfolios come in both ETF and mutual fund form.

Just remember the rub when it comes to positioning your portfolio for a bear market: Bear markets eventually end. Indeed, in the same note, Torres says a potential Federal Reserve pivot could drive the market to finish in the black by the end of 2023. And as bear markets come to a close, defensive-minded investments can grind to a halt.

So if you do jump into the safest Vanguard funds for short-term defense, pay attention, and be nimble.

Data is as of Jan. 20. 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 Young and The Invested (opens in new tab), a site dedicated to improving the personal finances and financial literacy of parents and children. He also writes the weekly The Weekend Tea (opens in new tab) 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 (opens in new tab).