Why you should buy these 2 defensive ASX shares today

Magellan Infrastructure Fund (ASX: MICH) is one of the 2 defensive ASX shares that an investor can buy today for a less volatile portfolio

| More on:
man and woman talking with each other whilst using a MacBook

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With the S&P/ASX 200 Index (ASX: XJO) climbing dramatically this week to a new post-COVID high, it can be tempting to think these sorts of lucrative market conditions can last forever. Alas, this has never been, and will never be, the case.

The markets are a volatile beast, and can both giveth and taketh away. While some investors embrace this inherent volatility as a useful way to buy shares on the cheap, it can be downright scary, and off-putting, for many others. That's where defensive ASX shares can be useful.

There are defensive ASX shares out there that have the potential to increase the stability and decrease the volatility of one's portfolio if that's an important consideration for you. Here are two such ideas today:

iShares Global Consumer Staples ETF (ASX: IXI)

This exchange-traded fund (ETF) from iShares only invests in a basket of global companies in the consumer staples sector. Consumer staples is an investing term that describes all of the goods and services we all tend to need, rather than want. This includes food, drinks, household essentials like laundry powder, soap and dishwashing liquid, and vices like alcohol and tobacco.

The beauty of this sector is that it tends to be almost completely immune from economic conditions. We all need to eat, drink and run our houses in good times and bad. And that makes these companies extremely defensive investments. Some of this ETF's largest holdings include Coca-Cola Co (NYSE: KO), Procter & Gamble Co (NYSE: PG), Unilever plc (LON: ULVR) and McDonald's Corp (NYSE: MCD). Even our own Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) feature. 

This ETF has returned an average of 12.11% per annum over the past 10 years. It charges a management fee of 0.46% per year.

Magellan Infrastructure Fund (ASX: MICH)

This listed fund is run by Magellan Financial Group Ltd (ASX: MFG). Magellan is one of the most popular fund managers in Australia. This fund focuses entirely on infrastructure. It invests in companies with large, stable infrastructure investments like toll roads, ports, airports, energy infrastructure and power generation and transmission. Like consumer staples, demand for these assets tends to be very consistent and inelastic. That means they tend to generate cash flows in good times and bad, making them very useful defensive investments.

Magellan Infrastructure Fund holds companies like Atmos Energy Corporation (NYSE: ATO), Enbridge Inc (NYSE: ENB) and our own Transurban Group (ASX: TCL).

This defensive ASX share has returned an average of 5.81% per annum since its inception in 2016. It charges a management fee of 1.05% per year.

Sebastian Bowen owns shares of Coca-Cola, McDonalds, and Procter & Gamble. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Unilever. The Motley Fool Australia owns shares of COLESGROUP DEF SET, iShares Global Consumer Staples ETF, Transurban Group, and Woolworths Limited. The Motley Fool Australia has recommended Magellan Infrastructure Fund. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Defensive Shares

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Defensive Shares

AML3D share price surges another 38% today! What's going on?

The defence sector is catching some strong bids.

Read more »

A banker uses his hands to protects a pile of coins on his desk, indicating a possible inflation hedge
Defensive Shares

Safeguarding against inflation: A defensive share strategy

Investing in defensive shares can shield your portfolio from inflation.

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Defensive Shares

Don't get clever, just buy stability: 2 defensive ASX shares to buy now

Analysts think these defensive shares would be top buys for investors right now.

Read more »

safe dividend yield represented by a piggy bank wrapped in bubble wrap
Defensive Shares

5 ASX shares to buy for turbulent times

Here are 5 stocks to consider buying for safety.  

Read more »

Men standing together and defending the goal post symbolising defensive shares.
Defensive Shares

4 defensive ASX shares to own in a greedy market: Macquarie

These experts reckon the ASX's record highs won't last...

Read more »

Two mature women learn karate for self defence.
Defensive Shares

2 defensive ASX income shares I think investors should consider buying for bumper returns!

These stocks could offer defence and good returns.

Read more »

Defensive Shares

The pros and cons of buying Telstra shares right now

Is this an opportunity calling?

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Defensive Shares

My 2 favourite ASX utility shares for January 2024

These stocks could provide a good mixture of defence and growth.

Read more »