Exchange traded funds (ETFs) are becoming increasingly popular for investors who want protection from volatility. The market has rallied in 2019, but continued performance is never guaranteed. Some of the most popular ETFs have seen an uptick in interest, as more investors seek streamlined portfolios.
Some ETFs are focused solely on growth, while others look more for stable income and resilience in the face of uncertain times.
Here are two defensive ETFs that could help to offset uncertainty in today’s market.
FlexShares Defensive Index Fund (NYSE ARCA: QDEF)
Highly defensive and income focused, the FlexShares Quality Dividend Defensive Index Fund is a good option for investors who want a strong spread across proven stocks and industries. While some funds focus on the megacaps, this one focuses more on consumer-oriented industries that show reliable growth and dividend return.
Top holdings include Johnson & Johnson, Microsoft, Walmart, Philip Morris International, and Pfizer. There’s no question that the asset spread here is diverse. If you seek stability above all else and aren’t looking for massive price gains, this fund is one to consider.
iShares Global Healthcare Exchange Traded Funds (NYSE ARCA: IXJ)
Healthcare shares are often touted for their stability and resilience against volatility. Healthcare is an industry that analysts love to recommend. The logic is simple… Even in a period of economic downturn, the demand for healthcare services, technology, and pharmaceuticals will be largely unaffected. With an aging population, it could even be argued that the healthcare sector is only likely to become more valuable in the coming years.
This ETF will give you exposure to companies like Merck & Co., Pfizer, Johnson & Johnson, Roche Holding AG, and Novartis. It is comprised of some of the most valuable health care stocks and is a suitable pick when you need long term protection for your investment portfolio.
The U.S. Economy Could Slow in the Next Two years
While the economy is still growing at a healthy rate today, that growth could slow significantly in the coming years. If you want to protect your portfolio and your income, defensive ETFs are often a great place to start.
As with every investment decision you make, be sure to research stocks and exchange traded funds thoroughly before buying or selling.
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