3 Defensive ETFs for Today’s Market Volatility

追加: 2026-05-14

[00:00:00]Market volatility can be a relentless thief that quietly erodes gains when geopolitical tensions or economic shifts take center stage.

[00:00:09]While many investors reach for the safety of cash or traditional bonds, those moves often come at the cost of long-term growth.

[00:00:17]As we've seen in recent cycles, a wait-and-see approach can leave you sidelined just when markets were back.

[00:00:25]Playing defense doesn't have to mean moving to the sidelines. The best defensive of ETFs act as a stabilizer by preventing the worst outcomes while preserving some upside potential.

[00:00:38]Not every defensive strategy is built for the same type of storm, though.

[00:00:42]Two ETFs shown here are sound long-term holdings, while the third specifically protects against unexpected inflation.

[00:00:49]Let's dive into them.

[00:00:52]First up is iShares MSCI USA Minimum Volatility Factor ETF, which trades under the ticker USMV.

[00:01:01]It's a well-designed low volatility strategy whose ability to weather downturns make it especially appealing in today's market environment.

[00:01:09]It earns a silver Morningstar medalist rating.

[00:01:13]Most low volatility ETFs look at each stock independently, resulting in a portfolio of similar companies with shared risks.

[00:01:22]USMV plays defense at the portfolio level, looking for the optimal set of low volatility companies based on how they interact with one another.

[00:01:33]For example, the portfolio can collect some relatively volatile stocks if they tend to zig when the rest of the portfolio zags.

[00:01:41]This approach diversifies risk better than others that simply sort by volatility.

[00:01:48]The ETF delivers on its promise.

[00:01:50]Volatility tends to be much lower than the market, and it captures less of the market's average drawdown.

[00:01:56]USMV won't keep up during market rallies, but its steady approach makes it a worthwhile ETF in any market environment.

[00:02:06]Next up is JPMorgan Hedged Equity Laddered Overlay ETF, ticker HELO.

[00:02:13]This bronze-rated active ETF pairs a stock portfolio with options to smooth market returns.

[00:02:20]This helps investors stay the course during volatile periods.

[00:02:25]On top of the stock portfolio that closely hugs the S&P 500, managers buy a protective put option 5% below the current price of the index.

[00:02:35]This limits potential losses to around 5% over 3-month periods.

[00:02:40]This protection is not free, however, and the ETF pays for it by limiting possible gains and re-exposing investors to losses if the S&P 500 falls by more than 20% in a 3-month period.

[00:02:55]This ETF takes a very different approach than USMV, but it has similarly followed through on its defensive ambitions.

[00:03:03]Since its inception 2 and 1/2 years ago, HELO has been 60% as volatile as the S&P 500 while capturing just 61% of the index's downside.

[00:03:15]While the concept of this ETF is simple, its structure is complex, and I recommend interested investors read the full analysis before jumping in with two feet.

[00:03:27]The last ETF here is an ultra-conservative index bond ETF.

[00:03:32]Vanguard Short-Term Inflation-Protected Securities ETF, ticker VTIP, holds inflation-protected securities, or TIPS, to protect against unexpected inflation.

[00:03:44]It charges just three basis points annually and earns a gold Morningstar medalist rating.

[00:03:51]TIPS adjust their principal amount higher as inflation picks up.

[00:03:55]This means you get higher interest payments as things get pricier and a higher principal payment if inflation persists when these bonds mature.

[00:04:05]TIPS also carry very little credit risk since they're a type of Treasury bond backed by the full backing of the US government.

[00:04:14]Adding short-term TIPS to your portfolio, such as through VTIP, can help your returns keep up with inflation without adding much additional credit or interest rate risk.

[00:04:25]And should inflation storm back, VTIP could be just what the doctor ordered.