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. 

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.

The post Looking to defend your portfolio from volatility? – 3 great ASX ETFs to consider appeared first on The Motley Fool Australia.

This portfolio spreads investments across thousands of companies worldwide, multiple sectors, and defensive assets while maintaining very low fees.

Many long-term Australian investors use a structure like this with multiple ASX ETFs. Let's have a closer look.

Vanguard Australian Shares Index ETF (ASX: VAS)

This ASX ETF forms the income backbone of the portfolio.

VAS tracks the S&P/ASX 300 Index (ASX: XKO), giving investors exposure to hundreds of Australia's largest companies. The ETF is heavily weighted toward financials and resources. They have historically been two of the most resilient sectors in the Australian economy.

Major holdings include blue-chip shares such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and CSL Ltd (ASX: CSL).

These companies generate enormous cash flows and tend to keep paying dividends even during economic downturns. This income stream, often boosted by franking credits, can be especially valuable when markets become volatile.

With a management fee of around 0.07%, this ASX ETF is also one of the most cost-effective ways to gain broad Australian market exposure.

Suggested allocation: 35%

Vanguard MSCI International Shares ETF (ASX: VGS)

This ASX ETF adds global diversification and long-term growth potential.

VGS holds more than 1,300 companies across developed markets, with strong representation in the United States, Europe, and Japan.

Its largest positions include global technology and consumer giants such as Apple Inc (NASDAQ: AAPL) and Nvidia Corp (NASDAQ: NVDA).

These companies dominate global industries and possess enormous balance sheets and pricing power. Many continued expanding during past crises such as the global financial crisis and the pandemic.

This ASX ETF reduces reliance on the Australian economy while providing exposure to sectors underrepresented on the ASX, particularly global technology and innovation.

Suggested allocation: 35%

VanEck FTSE Global Infrastructure ETF (ASX: IFRA)

This VanEck ASX ETF invests in global infrastructure companies, including utilities, pipelines, transport assets, and communication towers. Infrastructure businesses tend to generate stable and predictable cash flows, which is why they are commonly used as defensive holdings in investment portfolios.

The ASX ETF tracks the FTSE Global Core Infrastructure Index and focuses primarily on utilities, energy infrastructure, and transport assets worldwide. It is currency hedged to the Australian dollar, and the management fee is around 0.20%.

Infrastructure ETFs can work well in a recession-focused portfolio because the services they provide are essential to the functioning of the economy. Revenues are often contracted or regulated. This helps provide greater predictability, and cash flows are generally more stable than those of typical equities.

Suggested allocation: 20%

BetaShares Australian High Interest Cash ETF (ASX: AAA)

The BetaShares Australian High Interest Cash ETF provides the defensive buffer.

Unlike equity ETFs, AAA invests in high-interest bank deposit accounts. This means its value tends to remain stable while generating interest income linked to Australian cash rates.

During severe market sell-offs, this allocation can reduce overall volatility. It also provides liquidity that investors can deploy into equities at lower prices.

Having a small cash allocation can also make it psychologically easier to stay invested during major market downturns.

Suggested allocation: 10%

The post 4 ASX ETFs to ride through recessions and market crashes appeared first on The Motley Fool Australia.

In Australia, funds like Vanguard Australian Shares Index ETF (ASX: VAS) and iShares Core S&P/ASX 200 ETF (ASX: IOZ) track the biggest companies domestically. 

Additionally, there are similar funds to track US blue-chips.

However, there have been plenty of new funds hitting the market this year as providers try to focus on niche sectors and themes.

At the end of October, Betashares dropped its newest fund. 

The fund is the FTSE Global Infrastructure Shares Currency Hedged ETF (ASX: TOLL). 

ASX ETF overview 

According to Betashares, the fund aims to track the performance of an index (before fees and expenses) that provides exposure to infrastructure companies from developed countries, hedged into Australian dollars.

It is currently made up of 135 holdings. 

The provider said 50% of the portfolio is invested in utilities, 30% in transportation companies and 20% in infrastructure REITs, energy pipelines and telecommunications.

Infrastructure companies provide capital-intensive essential services that tend to be in consistent demand across the economic cycle. As a result, they typically enjoy strong market positions and pricing power, making them a useful portfolio building block. Low historical correlations with global equities mean an allocation to global infrastructure can also contribute to portfolio diversification.

According to the provider, the companies that this fund invests in tend to generate stable, long-term cash flows that are often linked to inflation. 

It aims to generate attractive quarterly income, funded by the dividends paid by the companies in the portfolio.

It has a 12 month trailing dividend yield of 3.2%.

Geographically, its largest exposure is to companies in: 

• United States (59.0%)
• Canada (10.8%)
• Australia (6.2%)
• Spain (5.7%)
• Britain (4.2%)

The fund is currency-hedged to AUD. This means the fund seeks to neutralise fluctuations in foreign currencies vs the Australian dollar. That means investors hold a "global infrastructure" exposure but with reduced foreign-exchange risk.

How has it performed?

This ASX ETF has only been listed for roughly one month so far. 

However, it is up 1.26% in that span. 

The fund may be ideal for investors wanting global infrastructure exposure without currency risk. 

It is worth mentioning there are some funds already listed on the ASX that may be directly competing with this Betashares ETF. 

For example: 

• Vanguard Global Infrastructure Index ETF (ASX: VBLD) – This fund offers exposure to infrastructure sectors, including transportation, energy and telecommunications. The ETF is exposed to the fluctuating values of foreign currencies.
• VanEck Ftse Global Infrastructure (Hedged) ETF (ASX: IFRA) – Also gives investors exposure to a diversified portfolio of infrastructure securities listed on exchanges in developed markets around the world.

The post Meet the newest ASX ETF from Betashares appeared first on The Motley Fool Australia.

The infrastructure sector is responsible for the backbone of the US economy. Plenty of businesses are involved in owning and operating infrastructure, which can be good investments.

The US is the world's biggest economy and more than 330 million people live there. However, according to the ETF provider Global X, the US is in "dire" need of infrastructure upgrades, with at least US$3.8 trillion ($5.76 trillion) worth of additional investment to "adequately repair existing infrastructure and keep pace with economic expansion."

Global X also said a growing driver of demand for infrastructure investment is the increased frequency of natural disasters. In 2023, the US reportedly experienced a record-breaking 28 weather and climate disasters, each costing more than US$1 billion.

Which ASX ETFs can be used to take advantage?

Some businesses are involved with infrastructure projects' construction, engineering, material procurement, transportation, and equipment distribution processes.

These companies can significantly benefit from the increased expenditure on US infrastructure from governments and privately-funded infrastructure projects.

The Global X US Infrastructure Development ETF (ASX: PAVE) invests in US-domiciled companies to capture the value of growing spending in the world's largest economy.

Some businesses inside the PAVE ETF include Eaton Corp, Trane Technologies, Quanta Services, Martin Marietta Materials, Emerson Electric and Parker Hannifin. It has a total of approximately 100 holdings.

In terms of risks, Global X noted that these companies "typically face intense competition and can be adversely impacted by shifts in government regulations and actions."

Do other funds provide infrastructure exposure?

Other ASX ETFs and investments can also provide exposure to global infrastructure. The US economy's size leads to those funds usually having a large weighting to US shares.

Examples include Vanguard Global Infrastructure Index ETF (ASX: VBLD) (with a 68.8% US weighting), VanEck FTSE Global Infrastructure (Hedged) ETF (ASX: IFRA) (with a 57.2% US weighting) and Magellan Infrastructure Fund (currency hedged) (ASX: MICH) (with a 38% US weighting).

While these ASX ETFs have a smaller allocation to US infrastructure, they're also not targeted at the new spending on infrastructure in the country. Instead, many of the businesses in the portfolios I mentioned have existing assets that are typically generating strong cash flows for shareholders and are hard to replicate.

The post How to get exposure to a potential $5.7 trillion US sector with ASX ETFs appeared first on The Motley Fool Australia.

And all this risk and uncertainty has wreaked untold havoc on global stock markets. It's begun to feel like just as things start looking up, a new destabilising event comes along and rocks the stock markets all over again.

Here at the Fool, we understand how nauseating market volatility can be. And we know that no amount of upbeat articles explaining how share price corrections are just a normal part of a well-functioning market makes them any less anxiety-inducing to actually live through.   

But there are some steps you can take to reduce the impact of market volatility on your portfolio.

Safe-haven assets and defensive shares are types of investments that don't typically exhibit the same level of price volatility as riskier shares. This means that they often preserve their value in a crisis – even if the rest of the market is tanking. These shares are unlikely to provide stellar growth opportunities, but adding some of them to your portfolio could help prop it up in a downturn.

So in this article, we look at 5 top ASX share contenders for turbulent times!

CSL Ltd (ASX: CSL)

The first share on our list is ASX healthcare giant, CSL. Healthcare is a great sector to invest in if you're worried about the economy.

Healthcare companies – particularly mature, well-established ones like CSL – tend to remain profitable even when the rest of the economy is struggling. This can make them great defensive shares to add to your portfolio.

CSL is a biopharmaceutical company that specialises in developing treatments for serious medical conditions. This includes vaccines for illnesses like polio and whooping cough, antivenom for snake and spider bites, and lifesaving medical treatments derived from human blood plasma. CSL makes well over US$2 billion in net profit each year, and somehow still manages to spend over US$1 billion on researching and developing new products. This makes it one of the safest ASX healthcare shares to own.

Woolworths Group Ltd (ASX: WOW)

Consumer staples are another sector of the economy that tends to remain resilient in a downturn.

Staples include household essentials like groceries, cleaning products, personal hygiene products – even alcohol and tobacco. Because they are necessities, consumer staples are usually among the last products households will cut back their spending on when times are tough.

Stable levels of demand mean consistent profits for consumer staples companies, even if the economy is experiencing a recession.

As the operator of the largest supermarket chain in the country, Woolworths is the dominant player in the ASX consumer staples sector. The ongoing Senate inquiry into supermarket pricing has caused a bit of tumult in the sector recently, but Woolworths remains a good long-term play for those looking to de-risk their portfolio.

Telstra Group Ltd (ASX: TLS)

In the modern world, phone and internet access is about as necessary for human survival as food and water. It's how we communicate, shop, work – our entire economy relies on it.

When Telstra's main rival Optus had a nationwide outage in 2023, it was estimated to have impacted 400,000 businesses. Life, as we knew it, ground to a screeching halt.

Because the internet is so necessary in our daily lives, telecommunications shares can be good investments to own in turbulent times (provided they keep their networks running!). Consistently high demand means telcos tend to generate predictable profits regardless of the state of the broader economy. Telstra holds the largest market share among Australian telcos and it also has a long history of paying healthy dividends to its shareholders.

Global X Physical Gold ETF (ASX: GOLD)

This list wouldn't be complete without at least a couple of exchange-traded funds (ETFs).

ETFs are a great way to instantly diversify your portfolio. Investing in an ETF can provide you with exposure to whole sectors of the stock market in just a single trade – some can even give you access to entirely different asset classes.

That's the case with the Global X Physical Gold ETF. Buying units in the fund gives you exposure to the price of gold, the king of safe-haven investments. Throughout history, gold has always been seen as valuable, meaning that investors often flock to it in a crisis. This increase in demand often results in the price of gold actually rising when other financial markets are imploding. This could help stabilise the value of your portfolio if the share market goes belly-up.

VanEck FTSE Global Infrastructure Hedged ETF (ASX: IFRA)

The last contender on our list of shares to own for turbulent times is another ETF. As the name suggests, VanEck's Global Infrastructure Fund invests in a diversified portfolio of international infrastructure shares.

Among its largest holdings are Australian toll-road operator Transurban Group (ASX: TCL), Auckland International Airport Ltd (ASX: AIA) and leading US electric utility company American Electric Power Company Inc (NASDAQ: AEP).

In fact, around 50% of the fund is allocated towards utilities companies. Like telcos, utilities tend to generate consistent revenues regardless of economic conditions. This could make the Global Infrastructure Fund another good option for investors who want more stability in their share portfolios.

The post 5 ASX shares to buy for turbulent times appeared first on The Motley Fool Australia.