Recession Proof ETFs for a Secure Future

Investing in a recession can be a daunting task, but with the right strategies, you can protect your portfolio and secure your financial future.

One of the most effective ways to do this is by investing in recession-proof ETFs, which are designed to perform well during economic downturns.

These ETFs typically focus on essential goods and services that people will always need, such as healthcare and consumer staples.

By investing in these sectors, you can reduce your risk and increase your chances of long-term success.

Some of the best recession-proof ETFs include the Vanguard Consumer Staples ETF (VDC) and the iShares U.S. Healthcare ETF (IYH).

For another approach, see: Leveraged Healthcare Etf

If you're looking to invest in recession-proof ETFs, consider the Invesco S&P 500 High Div Low Vol ETF (SPHD), which delivers high yields without excessive risk. Its holdings are mainly in defensive and consumer-based sectors, utilities, consumer defensive, and healthcare, all of which are well-poised for dividend growth during market downturns.

Here's an interesting read: High Yield Dividend Stocks 2023

The Consumer Staples Select Sector SPDR Fund is another area that should provide stability for investors, featuring top retailers and beverage companies, as well as businesses involved with personal care. Procter & Gamble is its top holding, accounting for 14% of its total weight.

The SPDR MSCI Europe Utilities UCITS ETF tracks large and medium-sized companies in the European utilities sector, delivering a return of 9% over five years. Its top ten stock holdings include Iberdrola, National Grid, Enel, RWE, and SSE.

Regular rebalancing of your portfolio helps maintain the desired asset allocation, ensuring your investments remain aligned with your long-term goals even during market downturns.

Consider the iShares Edge MSCI Min Vol USA ETF (USMV), which has over $23 billion in assets and minimizes risky exposure by selecting the top stocks with the lowest volatility.

The Invesco Food & Beverage ETF (NYSE:PBJ) focuses solely on food and beverage stocks, which are staples and essentials, no matter what the economy is doing. Its three largest holdings are Kroger, DoorDash, and Kraft Heinz.

Here are some top defensive ETFs to consider:

The iShares Edge MSCI Min Vol USA ETF (USMV) has over $23 billion in assets, a testament to its popularity and effectiveness in minimizing risky exposure.

This fund achieves low-risk exposure by selecting the top stocks with the lowest volatility and narrowing the selection further through its own ranking system and expected future volatility.

With an expense ratio of 0.15 percent, the fund is relatively inexpensive compared to others in its class.

Here are some key statistics for the iShares Edge MSCI Min Vol USA ETF:

The Invesco S&P 500 High Div Low Vol ETF (SPHD) is another option for those seeking low-risk investments with a high dividend yield.

Additional reading: Vanguard High Dividend Yield Etf

The MSCI Min Vol USA Index is a great way to invest in equities while minimizing risk. It's designed to create a basket of stocks with the lowest volatility from large- and mid-cap stocks.

This index is mimicked by the iShares Edge MSCI Min Vol USA ETF (USMV), which has over $23 billion in assets. The fund achieves this by selecting the top stocks with the lowest volatility and narrowing the selection further through its own ranking system and expected future volatility.

Broaden your view: Systematic Investment Plan Usa

The iShares Edge MSCI Min Vol USA ETF has delivered impressive returns, with 5-year returns (annualized) of 8.18 percent. Its expense ratio is also relatively low at 0.15 percent.

Here's a comparison of the iShares Edge MSCI Min Vol USA ETF with the Invesco S&P 500 High Div Low Vol ETF (SPHD):

The 1-3 Year Treasury Bond is a low-risk investment option that's worth considering. It's designed to hedge market downturns and can be a good addition to a diversified portfolio.

This bond fund offers a decent yield, with a dividend yield of 4.68 percent. This means you can earn a regular income from your investment.

The short maturities of the bonds held in this fund decrease the risk of runaway interest rates affecting its price. This makes it a more stable investment option.

One example of a 1-3 Year Treasury Bond ETF is the iShares 1-3 Year Treasury Bond ETF (SHY). Here are some key facts about this fund:

Consumer Staples are a great way to recession-proof your investments. These are businesses that provide goods and services that customers use every day, and so demand can remain fairly constant even as prices rise and economic conditions worsen.

The Consumer Staples Select Sector SPDR Fund features top retailers and beverage companies as well as businesses involved with personal care. Procter & Gamble is the fund's top holding, accounting for 14% of its total weight, followed by PepsiCo at over 10%.

Consumer staples ETFs like the Vanguard Consumer Staples ETF (VDC) and the iShares U.S. Consumer Staples ETF (IYK) have a strong focus on sectors that can defend a portfolio against market volatility. VDC's three largest holdings are in Procter & Gamble (PG), Costco Wholesale (COST), and Walmart (WMT).

These ETFs have impressive returns, with VDC boasting 5-year returns of 8.83 percent and IYK posting an average annual return of 10.2% over the past 10 years.

Worth a look: Top Performing Vanguard Etfs

Here are some key statistics on these ETFs:

The Invesco Food & Beverage ETF (PBJ) is another great option, focusing solely on food and beverage stocks, which are staples and essentials, no matter what the economy is doing.

Utilities are a great sector to consider when looking for recession-proof ETFs. Sectors like utilities and water tend to hold strong during times of market downturn.

Their demand is a part of everyday life, regardless of market movements. Utility stocks are generally considered to be a good defensive move against bear markets and market downturns.

Two of the fund's largest holdings — NextEra Energy (NEE) and Duke Energy (DUK) — provide electricity to millions of Americans along the country's Southeast coast.

The Fidelity MSCI Utilities ETF (FUTY) has a 5-year return of 4.8 percent and a dividend yield of 3.25 percent. The expense ratio is a low 0.084 percent.

The Utilities Select Sector SPDR ETF (XLU) is the largest utilities-tracking ETF on the equity market, with over $11 billion in assets. It has a 5-year return of 5.29 percent and a dividend yield of 3.4 percent.

For your interest: Internal Rate of Return Private Equity

Here's a comparison of the two ETFs:

Utilities are another common defensive sector to invest in during tough economic times. Their revenues tend to be relatively stable, compared to those of cyclical industries.

The SPDR MSCI Europe Utilities UCITS ETF has delivered a return of 9% over five years, 8% over three years, and 2.9% over one year. Its top ten stock holdings include Iberdrola, National Grid, Enel, RWE, and SSE.

Dividend investing is a great way to generate steady income, even in tough economic times. The Vanguard Dividend Appreciation ETF invests in top dividend paying companies, including United Health, Johnson and Johnson, and JP Morgan Chase.

It's a low-cost option, with an expense ratio of just 0.06%. This means you get to keep more of your returns.