This ASX ETF could help protect your portfolio
When it comes to investing in ASX shares, I try to be as optimistic as possible. That's not just blind optimism. Statistically, it makes sense to be optimistic when investing in stocks or ASX exchange-traded funds (ETFs). The markets have historically gone up far more often than they go down. Plus, the S&P/ASX 200 Index (ASX: XJO) has never failed to exceed its previous all-time high, as we've seen many times in 2026.
Saying that, there are more than a few reasons to feel less-than-optimistic about the current state of the global economy. Inflation remains uncomfortably high across the world's advanced economies. Interest rates have been ticking up and look likely to continue to do so. And adding literal fuel to the fire, oil prices have been surging higher over the past week, crossing US$100 a barrel. They could well hit US$110 a barrel if the current trajectory continues.
Now, if these factors result in a recession or stock market crash, my investing strategy won't be changing. I'll continue to buy high-quality companies at prices that make sense, and hold for the long term. But many investors don't have that luxury. Many, particularly retirees and income investors, rely on their ASX shares and ETFs for their retirement income. These investors may struggle to cope, either psychologically or financially, if the markets take a tumble tomorrow.
If that's you, you may wish to consider investing in what I think is one of the most defensive ETFs on the ASX. This ETF is none other than the iShares Global Consumer Staples ETF (ASX: IXI).
A defensive ASX ETF
This fund does pretty much what it says on the tin. It invests in an underlying portfolio of shares that are all leaders in the global consumer staples sector. Consumer staples are goods we tend to need to buy, rather than ones we purchase when we're flush with cash or in the mood to splash out. They include food, drinks, and household essentials, as well as tobacco and alcohol products.
The beauty of these products as an investment comes from their very nature as staples. Even if times get tough and we have to collectively tighten our belts, we still need to eat, drink, and stock our households with life's essentials. That makes the companies that manufacture and sell these goods very stable, predictable investments. Just consider some of the iShares Global Consumer Staples ETF's holdings. They include Coca-Cola, Walmart, PepsiCo, Unilever, Costco Wholesale, Philip Morris International, Nestle, Monster Beverage, Colgate-Palmolive, and Procter & Gamble. Even our own Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are included.
These companies are some of the world's most resilient, defensive businesses. They either manufacture goods that people will buy, rain, hail, or shine, or else provide an easy place to buy those goods. That makes them incredibly resistant to both economic slowdowns and inflation.
So if you're an investor who is looking at the state of the global economy with concern, this might be an appropriate ASX ETF to consider for your portfolio.
The post This ASX ETF could help protect your portfolio appeared first on The Motley Fool Australia.
Motley Fool contributor Sebastian Bowen has positions in Coca-Cola, Costco Wholesale, PepsiCo, Philip Morris International, Procter & Gamble, and Unilever. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Colgate-Palmolive, Costco Wholesale, Monster Beverage, and Walmart. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Nestlé, Philip Morris International, and Unilever. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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