From minimum-volatility shares and dividend growers to Treasury bills and small-cap value, these funds offer different ways to stay invested when markets turn lower.
Bear markets have a habit of arriving sooner than many investors expect. Historical data show that U.S. stocks have tended to suffer a bear market about once every four to six years over the long run, although the timing and severity vary widely. That is why a portfolio defence plan matters even when the market looks calm, especially with interest rates still elevated, inflation not fully subdued and geopolitical risks continuing to threaten sentiment. Rather than fleeing to cash, investors may be better served by adjusting their mix modestly towards assets that can soften the blow while preserving long-term equity exposure.
One of the cleaner ways to do that is through a low-volatility fund such as the iShares MSCI USA Minimum Volatility ETF, which is designed to assemble a broad U.S. stock portfolio with lower expected swings than the market as a whole. iShares says the fund seeks to hold stocks with lower volatility characteristics, while still keeping equity exposure intact. That approach can be useful for investors who want to stay invested but are uneasy about a sharp drawdown. As of early October 2026, iShares said the fund had about $23.5bn in net assets and an expense ratio of 0.15%, which keeps costs relatively low for a defensive strategy. Along similar lines, the Vanguard Dividend Appreciation ETF appeals to investors looking for companies with sturdy balance sheets, strong cash generation and a record of increasing dividends over time.
For investors willing to lean into a neglected part of the market, Avantis U.S. Small Cap Value ETF offers a different kind of shelter: not from volatility itself, but from valuation risk. In a market dominated by mega-cap technology shares over the past several years, smaller value stocks have often looked overlooked. The logic is that cheap shares can offer more room for recovery if economic conditions improve and earnings stabilise. The caution is that this part of the market can be choppy in the short term, so it is better suited to patient investors who can tolerate uncertainty in exchange for the possibility of better long-run returns.
Some investors, however, want defence with a more immediate income stream. For them, a short-duration Treasury fund such as the iShares 0-3 Month Treasury Bond ETF can be attractive because it holds Treasury bills, which are backed by the U.S. government and are among the least risky securities available. Kiplinger has noted that low-risk ETFs can serve as a more flexible alternative to certificates of deposit for cash that may still need to stay accessible, while preserving some yield. The trade-off is that short-term government debt will not match the long-term growth potential of stocks, so it works best as a stabiliser, not a full replacement for equities.
The simplest defence of all may be not to overhaul a portfolio at every sign of trouble. Vanguard’s Total Stock Market ETF remains a broad, low-cost core holding for investors who want to stay disciplined through downturns. Kiplinger’s recent ETF guide emphasised that the best fund choice depends on the investor’s goal, risk tolerance and time horizon, and Vanguard’s long-term lineup reflects the same buy-and-hold philosophy that has made low-cost indexing durable over decades. For many people, the right bear-market response is not to predict the next downturn perfectly, but to own a portfolio they can keep funding when prices fall.
Bear markets are uncomfortable, but they are also a normal part of investing. A sensible response is usually to prepare in advance rather than to react in panic once losses begin. Whether the answer is lower volatility, dividend growers, cheap small-cap value, Treasury bills or simply a steady hand on a broad-market index fund, the goal is the same: stay invested through the rough patches and avoid making a temporary decline permanent by bailing out at the wrong time.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
