5 Best Defensive ETFs To Buy For Plunging Markets

2. iShares US Consumer Staples ETF (NYSE:IYK)

5-Year Share Price Performance as of March 25: 68.03%

Ranking 1st on our list of the best defensive ETFs is iShares US Consumer Staples ETF (NYSE:IYK). iShares US Consumer Staples ETF (NYSE:IYK) aims to replicate the performance of the Russell 1000 Consumer Staples RIC 22.5/45 Capped Index, which consists of US equities within the consumer staples sector. As of March 25, 2024, the fund owns net assets worth $1.3 billion, and its portfolio consists of 55 stocks, along with an expense ratio of 0.40%. 

PepsiCo, Inc. (NASDAQ:PEP) is one of the top holdings of iShares US Consumer Staples ETF (NYSE:IYK). On March 17, Morgan Stanley upgraded PepsiCo, Inc. (NASDAQ:PEP) stock to Overweight, considering it a top pick due to its solid long-term business model and improving international performance. Analyst Dara Mohsenian highlighted PepsiCo, Inc. (NASDAQ:PEP)’s potential relative pricing power shift and sees opportunity in the stock, despite recent weak US scanner data. The market’s focus on past disappointments is viewed as an opportunity to buy PepsiCo at a relatively low valuation compared to peers, with anticipated improvement ahead, noted the analyst. 

According to Insider Monkey’s fourth quarter database, 64 hedge funds were bullish on PepsiCo, Inc. (NASDAQ:PEP), compared to 65 funds in the last quarter. 

Aristotle Atlantic Core Equity Strategy stated the following regarding PepsiCo, Inc. (NASDAQ:PEP) in its fourth quarter 2023 investor letter:

“We sold PepsiCo, Inc. (NASDAQ:PEP) based on our belief that the inflation and interest rate cycle has peaked, and the company may have difficulty maintaining the recent organic growth trends which were driven mainly by price increases. Furthermore, the market appears to be shifting away from defensive names and into a more cyclical positioning which could cause PepsiCo to lag.”