It seems it's going to be another volatile – meaning negative – day for the ASX today. The S&P 500 fell 1.8% and the ASX seems as though it may fall by more than 1% this morning.
It's days like this that can cause people to panic and sell. Would you sell your house because it dropped 1% in value? No! That's how you should think about your shares too.
However, it can be scary to see your portfolio drop by hundreds or thousands of dollars in one day.
That's why it could be worth holding some defensive, low volatility shares in your portfolio that don't have much to do with the cyclical sectors of the economy.
I believe these two shares could be good options to avoid some of the volatility:
Duxton Water Ltd (ASX: D2O)
Duxton Water is a company that owns water entitlements and leases them to agricultural businesses. The price for water has almost nothing to do with economic cycles and more to do with how much rain there is in any particular year and how much water demand there is.
Water prices are rising with regional Australia suffering through a particularly dry spell at the moment.
Duxton Water publishes its underlying value monthly, which gives investors transparency about the value they're getting.
Over the long-term water prices should steadily rise as inflation and food values increase.
It currently offers a partially franked dividend yield of 3.5%.
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate investment trust (REIT) that owns a variety of farm types like vineyards, cotton, almonds and cattle.
Whilst the value of farms can change due to economic cycles and interest rates, Rural Funds' underlying rental profit is very reliable due to its contracts that have locked in slow-and-steady rental growth related to a 2.5% increase or CPI inflation.
It also has a significant amount of water entitlements for its tenants to use, plus Rural Funds can benefit in the long-term growth of the water value too.
It currently offers a distribution yield of 4.7%.
Foolish takeaway
Both of these shares are currently flat, amongst a sea of red in the market, showing they can hold their value. I'm glad both of them are two of my larger positions – it makes some of my other positions seem less disappointing today!
