The article presents four ETFs as options for a more defensive portfolio amid recession fears: QUAL for quality stocks, VDC for consumer staples, USMV for lower volatility and VGIT for intermediate-term Treasuries. It favors a defensive tilt over moving entirely to cash.
The funds are the iShares MSCI USA Quality Factor ETF (QUAL), Vanguard Consumer Staples ETF (VDC), iShares MSCI USA Minimum Volatility Factor ETF (USMV) and Vanguard Intermediate-Term Treasury ETF (VGIT). QUAL looks for high returns on equity, low debt-to-equity ratios and stable earnings growth; VDC targets consumer staples, which the article says tend to have durable demand. USMV seeks to minimize the portfolio’s overall volatility, while VGIT targets intermediate maturities that may yield more than Treasury bills without the higher rate sensitivity of long-term Treasuries.
The article cites high inflation and Federal Reserve rate increases. It says AI infrastructure spending and strong corporate earnings have so far helped shield the S&P 500 from deeper downturns, and notes that some big tech executives have discussed slowing AI development. The author says timing a recession requires correctly predicting it, selling at the right price and buying back lower; retaining equity exposure leaves potential upside if the call is wrong.
