3 Defensive ETFs Worth Buying as April 2026 Volatility Continues
3 Defensive ETFs Worth Buying as April 2026 Volatility Continues
Chris Neiger, The Motley FoolSun, April 5, 2026 at 5:05 PM UTC
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Key Points -
The market is swinging wildly as investors try to determine when the war in Iran will end.
Investing in low-volatility ETFs can be a great way to ride out some of the market's turmoil.
Many ETFs charge low annual fees and provide significant diversification.
10 stocks we like better than iShares Trust - iShares Msci Usa Min Vol Factor ETF ›
We're just a few months into 2026, and the stock market is already on a roller coaster. The war in Iran, surging oil prices, and rising inflation are putting pressure on the economy and consumers. The CBOE Volatility Index, also called VIX, is up 73% since the beginning of the year, indicating that investors are nervous and expect more volatility ahead.
It's impossible to avoid volatility completely when you're invested in stocks, but you do have some good options if you want to stay in the market but reduce some of the biggest price swings. Here are three exchange-traded funds (ETFs) that can help you sidestep some of the turbulence.
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The slow and steady approach
If your goal is to minimize volatility, the iShares MSCI U.S. Minimum Volatility Factor ETF (NYSEMKT: USMV) is the way to go. A stock's volatility is measured by its beta, and the S&P 500 has a beta of 1. This fund has a beta of just 0.55, significantly lower than the broader market.
The fund aims to reduce your risk, so your portfolio has fewer price swings, and you'll benefit from a low expense ratio of just 0.15%.
You'll be invested in about 170 companies through the fund, including exposure to Waste Management, ExxonMobil, and Berkshire Hathaway. If you're worried that you'll miss out on some of the biggest trends with a minimal volatility fund, you can have both with this, as it's also invested in AI leaders, including Nvidia and Microsoft.
A specifically low-volatility option
Another ultra-low-volatility fund is the Invesco S&P 500 Low Volatility ETF (NYSEMKT: SPLV), which invests in the 100 S&P 500 stocks with the lowest volatility over the past 12 months. Your money will be spread across a wide range of sectors, including utilities, real estate, consumer goods, financial companies, and healthcare.
Diversity is an important part of this fund, but so is the fact that the companies you'll be invested in are very low-volatility stocks, including Southern Co., Realty Income, and Johnson & Johnson. While its expense ratio of 0.25% is higher than the iShares MSCI U.S. Minimum Volatility Factor ETF's expense ratio, it's still lower than the industry average of about 0.34%.
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This fund sticks with the staples
Another angle to play among low-volatility stocks is to focus on companies that sell things that everyone buys all the time, no matter what's happening with the economy. One of the best ways to do that is to own the State Street Consumer Staples Select Sector SPDR® ETF (NYSEMKT: XLP).
The fund focuses on essential household items, personal care, food, and other staples, with holdings in Walmart, Procter & Gamble, Costco Wholesale, and Coca-Cola. Not only will you own these stable companies that sell consistently in-demand products, but you'll also pay a very low annual expense ratio of just 0.08%.
This fund -- and any of the others listed above -- could be great places to put some money if some of the most pessimistic economic predictions pan out. For example, economists at Moody's Analytics recently raised the odds of a recession over the next 12 months to nearly 49%, due to the war in Iran.
Recent estimates from the Organization for Economic Cooperation and Development say that U.S. inflation could reach 4.2% this year, well above its previous estimate of 2.8% and higher than the Federal Reserve's estimate of 2.7%.
In short, if you expect more market volatility and you're looking for a potentially safer place to ride out some of the biggest ups and downs, putting some money into these funds is a great option.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Costco Wholesale, Microsoft, Moody's, Nvidia, Realty Income, and Walmart. The Motley Fool recommends Johnson & Johnson and WM. The Motley Fool has a disclosure policy.
Source: “AOL Money”
