5 Best Defensive ETFs To Buy For Plunging Markets

In this article, we discuss 5 best defensive ETFs to buy. If you want to read our discussion on the consumer defensive industry, head directly to 14 Best Defensive ETFs To Buy For Plunging Markets. 

5. Invesco Food & Beverage ETF (NYSE:PBJ)

5-Year Share Price Performance as of March 25: 47.11%

Invesco Food & Beverage ETF (NYSE:PBJ) ranks 4th on our list of the best defensive ETFs. Invesco Food & Beverage ETF (NYSE:PBJ) is linked to the Dynamic Food & Beverage Intellidex Index, investing at least 90% of its assets in the index’s securities. It comprises 30 US food and beverage companies engaged in manufacturing, selling, or distributing food and beverage products, agricultural products, and new food technology-related items. As of March 22, 2024, the fund offers an expense ratio of 0.57%. The ETF was launched on June 23, 2005. 

DoorDash, Inc. (NASDAQ:DASH) is the largest holding of Invesco Food & Beverage ETF (NYSE:PBJ). On February 15, DoorDash, Inc. (NASDAQ:DASH) reported a Q4 GAAP EPS of -$0.39, missing market consensus by $0.25, and a revenue of $2.3 billion, topping Street estimates by $50 million. 

According to Insider Monkey’s fourth quarter database, 64 hedge funds were long DoorDash, Inc. (NASDAQ:DASH), compared to 57 funds in the last quarter. 

4. First Trust Consumer Staples AlphaDEX Fund (NYSE:FXG)

5-Year Share Price Performance as of March 25: 48.36%

First Trust Consumer Staples AlphaDEX Fund (NYSE:FXG) aims to mirror the performance, before fees and expenses, of the StrataQuant Consumer Staples Index, which represents the consumer staples sector. The ETF was launched in May 2007. As of March 25, 2024, First Trust Consumer Staples AlphaDEX Fund (NYSE:FXG)’s net assets amounted to $437.25 million, along with an expense ratio of 0.63% and a portfolio comprising 40 stocks. It is one of the best defensive ETFs to invest in. 

Performance Food Group Company (NYSE:PFGC) is one of the largest holdings of First Trust Consumer Staples AlphaDEX Fund (NYSE:FXG). The company distributes food and food-related products across the United States. On February 7, Performance Food Group Company (NYSE:PFGC) reported earnings for the second quarter of fiscal year 2024. The company announced a non-GAAP EPS of $0.90, missing market estimates by $0.02, and a revenue of $14.3 billion, beating Street consensus by $20 million. 

According to Insider Monkey’s fourth quarter database, 37 hedge funds were long Performance Food Group Company (NYSE:PFGC), compared to 32 funds in the prior quarter. 

ClearBridge Mid Cap Strategy stated the following regarding Performance Food Group Company (NYSE:PFGC) in its fourth quarter 2023 investor letter:

“Our holdings in the consumer staples sector also helped drive performance. Restaurant foodstuff distributor Performance Food Group Company (NYSE:PFGC) continues to benefit from greater consumer spending on dining. Likewise, Coty, the global beauty company comprised of a market-leading prestige fragrance business and mass cosmetic business, reported strong quarterly earnings with outperformance across all geographic regions and operating segments. With the continued strength of the prestige fragrance market globally, we believe the company’s fundamentals have improved much more than the stock’s valuation.”

3. ProShares Ultra Consumer Goods (NYSE:UGE)

5-Year Share Price Performance as of March 25: 59.96%

ProShares Ultra Consumer Goods (NYSE:UGE) aims to achieve daily investment results, before fees and expenses, that are double (2x) the daily performance of the S&P Consumer Staples Select Sector Index. The ETF was established on January 30, 2007. As of March 25, 2024, the fund features a net expense ratio of 0.95%. ProShares Ultra Consumer Goods (NYSE:UGE) is one of the best defensive ETFs to invest in. 

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.”

1. Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI)

5-Year Share Price Performance as of March 25: 78.74%

Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) aims to replicate the CRSP US Total Market Index’s performance, comprising large, mid, and small-cap equities diversified across growth and value styles. It utilizes a passively managed, index-sampling approach. It is one of the best defensive ETFs to invest in. The fund was launched May 24, 2001. As of February 29, 2024, Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI)’s portfolio consists of 3731 stocks, and its net assets equal $1.5 trillion.

Apple Inc. (NASDAQ:AAPL) is one of the top holdings of Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI). On March 25, Wedbush reaffirmed its Outperform rating and a $250 price target for Apple Inc. (NASDAQ:AAPL), citing the current period as an opportunity for further growth, particularly with Apple’s involvement in the artificial intelligence revolution. Additionally, Wedbush noted that Apple CEO Tim Cook’s recent trip to China aims to strengthen the company’s presence in the region, despite existing geopolitical tensions.

According to Insider Monkey’s fourth quarter database, 131 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL), compared to 134 funds in the last quarter.

Orbis Global Equity Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:

“Never before has following the crowd made so much money. Nor, in our estimation, so little sense. But just look at the opportunities the crowd has left for those of us willing to take a different view. We could wax lyrical about the glaring difference in value between Korean banks priced at 4 times earnings, versus Apple Inc. (NASDAQ:AAPL) at 28 times, despite diverging fundamentals—Apple is increasingly at risk of bans in China, while Korean banks could double their dividends.”

Should you invest $1,000 in Apple right now?

Before you buy stock in AAPL, consider this:

The Insider Monkey Quarterly Newsletter just identified what we believe are the 14 best stocks for investors to buy now… and AAPL wasn’t one of them. The 14 stocks that made the cut could produce monster returns in the next few months.

Quarterly Newsletter is your easy-to-follow blueprint for building a winning portfolio.  It includes stock picks from billionaires, regular updates from hedge fund investor letters, and 14 fresh stock picks each quarter. The Quarterly Newsletter service has more than doubled the return of S&P 500 since 2014.

See the 14 stocks

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 20 Countries with the Highest Heart Disease Deaths Per Capita and Navigating Regulatory Changes: 10 Cannabis ETFs To Explore.