In times of volatility it can be prudent for investors to shift portfolio allocation towards defensive options.
Defensive investing is often ideal during periods of market volatility because it prioritises stability, and risk management over aggressive growth.
When markets fluctuate sharply due to economic uncertainty, geopolitical events, or shifting interest rates, defensive strategies focus on assets that tend to remain resilient – such as high-quality dividend stocks, essential consumer goods companies, and other sectors with steady demand.
These investments typically experience smaller price swings and provide more predictable income, helping investors reduce the impact of sudden downturns.
By emphasising consistency and financial strength, defensive investing allows portfolios to weather turbulent markets while maintaining the flexibility to pursue growth opportunities once conditions stabilise.
For investors aiming to minimise volatility in their portfolios, here are three ASX ETFs to consider.
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VanEck Ftse Global Infrastructure (Hedged) ETF (ASX: IFRA)
IFRA gives investors exposure to a diversified portfolio of infrastructure securities listed on exchanges in developed markets around the world.
At the time of writing, it includes 134 holdings.
The fund tracks the FTSE Global Core Infrastructure Index and primarily invests in utilities, energy infrastructure, and transportation assets around the world.
It is currency-hedged to the Australian dollar and carries a management fee of approximately 0.20%.
It may attract defensive investors because infrastructure companies operate under long-term contracts or regulated revenue frameworks, which can make their income streams more predictable and their cash flows generally more stable than those of typical equities.
The fund has risen almost 10% this year amidst wider global volatility.
iShares Edge Msci Australia Minimum Volatility ETF (ASX: MVOL)
This ASX ETF aims to provide investors with the performance of the MSCI Australia IMI Select Minimum Volatility (AUD) Index.
The index is designed to measure the performance of Australian equities that, in aggregate, have lower volatility characteristics relative to the broader Australian equity market.
According to iShares, minimum volatility strategies aim to lose less than the broad market during downturns.
It includes exposure to companies providing essential services like Telstra Group Ltd (ASX: TLS) and Transurban Group (ASX: TCL).
At the time of writing, it includes 105 holdings with its largest sector exposure being to:
- Financials (30.84%)
- Materials (18.50%)
- Industrials (12.06%)
- Communication (7.22%)
- Consumer Staples (7.21%)
iShares MSCI World ex Australia Minimum Volatility ETF (ASX:WVOL)
As the name suggests, this fund uses the same strategy as the previous fund. However this ASX ETF has a global focus rather than Australia.
The fund aims to provide investors with the performance of the MSCI World ex Australia Minimum Volatility (AUD) Index, before fees and expenses.
The index is designed to measure the performance of developed market equities that, in the aggregate, have lower volatility characteristics relative to the broader global developed equity markets.
