The S&P 500 (SNPINDEX: ^GSPC) is cooling off after rip-roaring features of over 20% in each 2023 and 2024.
The Nasdaq Composite (NASDAQINDEX: ^IXIC) is in a correction — which suggests it’s down over 10% from a latest excessive, whereas the S&P 500 is down 5.9% 12 months to this point (YTD) on the time of this writing.
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And but, the healthcare sector, utilities, and shopper staples have all defied broader market actions by posting YTD features.
This is why buyers are inclined to flock to safer sectors during times of market uncertainty, and three low-cost exchange-traded funds (ETFs) you need to use to put money into every sector.
Picture supply: Getty Photographs.
1. Healthcare
Among the many greatest performing sectors in 2025 has been Healthcare.
Not surprisingly, the Vanguard Well being Care ETF (NYSEMKT: VHT) has gained 4.5% this 12 months. And with only a 0.09% expense ratio and a minimal funding of $1, it’s a cheap solution to dip your toes into the sector. (The opposite ETFs we’ll talk about later have similar expense ratios and minimal funding thresholds.)
The healthcare sector bought off towards the tip of final 12 months because of a pullback within the inventory worth of drugmaker Eli Lilly and due to a steep drawdown in medical insurance firm UnitedHealth Group, which misplaced 17% in December. So, the sector was notably crushed down heading into this 12 months.
Healthcare tends to be one of many most secure sectors as a result of demand for healthcare services is not as susceptible to enterprise cycle modifications. Sectors like shopper discretionary and industrials rely extra on financial development.
Nonetheless, the sector has gotten riskier because of the rise of Eli Lilly, which has elevated severalfold over the previous few years and now sports activities a market cap of $719 billion on the time of this writing. That makes Eli Lilly the highest-weighted part within the Vanguard Well being Care ETF, with a ten.5% weighting. Eli Lilly’s features have come primarily from its dominance within the weight loss drug market, which may very well be seen as extra of a discretionary product than different medicine. So going ahead, the healthcare sector may very well be rather less protected.
The Vanguard Well being Care ETF has a yield of 1.4% and a price-to-earnings (P/E) ratio of 31.6 — which is roughly the identical yield because the S&P 500, however a costlier valuation.
2. Utilities
The Vanguard Utilities ETF (NYSEMKT: VPU) yields 2.9% and has a P/E ratio of simply 20.2, making it a much more engaging selection for buyers in search of passive earnings and worth.
Over 61% of the fund is in electrical utilities, a lot of that are regulated. These corporations work with authorities businesses to set costs. Working prices and new initiatives may be capital intensive, so corporations demand clear paths for future money flows to justify infrastructure spending. Regulation helps present that predictability, nevertheless it additionally reduces upside potential. So many utilities merely grow earnings at a slow and steady rate, passing alongside the majority of income to shareholders via dividends.
Utilities is arguably the sector most shielded from tariffs, since they principally cope with home energy manufacturing and consumption. Though tariffs might improve supplies prices. All instructed, the utility sector is about as protected because it will get within the inventory market, nevertheless it additionally has arguably the bottom development prospects of any sector — therefore why it tends to commerce at a reduction to the S&P 500.
3. Shopper staples
High holdings within the Vanguard Shopper Staples ETF (NYSEMKT: VDC) embrace retailers like Costco Wholesale and Walmart, every-day use product makers like Procter & Gamble, and beverage corporations like Coca-Cola and PepsiCo.
Throughout a recession, individuals could delay a automobile or residence buy or take a inexpensive trip. However they’re much less more likely to pull again on shopping for merchandise like toothpaste. In actual fact, grocery procuring might go up as spending shifts away from eating places to cooking at residence.
The buyer staples sector tends to develop steadily over time because of inhabitants development and international consumption. Costco and Walmart are closely concentrated in North America, however corporations like Coca-Cola promote extra merchandise exterior North America.
The buyer staples sector was remarkably resilient even within the face of inflation as a result of many corporations can go alongside larger prices to prospects. If tariffs ramp up and keep round, these corporations ought to have fairly sturdy pricing energy.
Costco and Walmart made all-time highs final 12 months, though each shares have been pulling again in latest weeks, dragging down the broader sector. Costco simply suffered its largest single-session sell-off in over three years. Nonetheless, the 2 shares make up over 1 / 4 of the Vanguard Shopper Staples ETF. It is value being conscious of the affect these two corporations have on the ETF’s efficiency earlier than contemplating an funding within the fund.
The Vanguard Shopper Staples ETF has a yield of two.1% and a P/E ratio of 24.8, giving it considerably larger passive earnings potential than the S&P 500 and near the identical valuation.
Utilizing protected sectors to your benefit
Protected sectors can function key function gamers in a diversified portfolio by being much less susceptible to financial swings. Since these sectors can transfer opposite to the broader indexes, they’ll additionally make sure that a portfolio is not overly correlated.
For instance, mega-cap development shares like Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta Platforms, and Tesla, have all been promoting off regardless of variations in every enterprise. Over-concentrating in related corporations could make your portfolio risky. So, sprinkling in some safer dividend shares or ETFs right here and there may be a good suggestion.
Nonetheless, it is a mistake to commerce out and in of sectors or overhaul your investment strategy simply because the market is present process a sell-off.
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Randi Zuckerberg, a former director of market improvement and spokeswoman for Fb and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of administrators. John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Daniel Foelber has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, Tesla, and Walmart. The Motley Idiot recommends UnitedHealth Group and recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
