Amid recent market turbulence and a volatile VIX, investors are turning to traditionally stable sectors like healthcare, consumer staples, and utilities, highlighting a shift towards steadiness over glamour in portfolio strategies.
Investors have spent much of this year swinging between enthusiasm and caution, with technology shares and artificial intelligence names doing much of the heavy lifting. That has kept markets jumpy. The Cboe Volatility Index, or VIX, rose to 35 in March, a level that Cboe said was last exceeded only during the tariff turmoil of 2025 and the outbreak of war in Ukraine. The S&P 500 has also moved sharply, with year-to-date returns ranging from a loss of 7.7% to a gain of 13.9%, according to data on the index’s performance, while Nvidia has seen a wide trading range of its own.
That sort of market action tends to expose a basic truth: not every investor wants excitement. Recent fund flow data from the Investment Association, the UK industry body, showed that retail investors put more money into funds in June than in any month since August 2021, but much of that cash went into defensive strategies such as bonds and cash-like assets. Simon Skinner of Orbis Investments said the appeal of fashionable trades can fade quickly once optimism becomes crowded into the price. In his view, the opposite is often true of neglected areas, where low expectations can leave room for better-than-expected returns.
The case for steadier sectors rests on cash flow, not glamour. Marcel Stötzel of Fidelity said some of the strongest long-term investments are businesses that perform ordinary tasks well, generate reliable cash and return it to shareholders over many years. Skinner pointed to consumer staples, utilities and healthcare as examples of sectors where demand remains relatively stable whatever the economic backdrop. People continue to buy toothpaste, power and medicine, which makes earnings more predictable and reduces the scope for speculative excess.
Healthcare may be especially interesting after years of being treated as a dull corner of the market. David Cumming of BNY Investments Newton said the sector tends to do relatively well when technology weakens and that it now looks cheap versus its own history. He also argued that healthcare companies could benefit from artificial intelligence as users of the technology, even if they are not among the headline names driving the boom. For investors seeking exposure, the article highlighted a range of exchange-traded funds and trusts linked to consumer staples, utilities and healthcare.
Banks and carmakers also sit in the “boring but potentially useful” category, though with more caveats. Cumming said financials can provide a cushion as long as the economy stays broadly sound, while Stötzel warned that leverage, credit conditions and rate moves can still make them volatile. In autos, Cumming described the sector as deeply unloved and noted that Volkswagen trades on less than four times expected earnings. Yet the broader message from the fund managers was not simply to abandon growth in favour of defensiveness. Sam North of eToro said balance matters, because no theme should dominate forever, while Skinner and Stötzel both stressed that valuation, balance sheets and cash generation matter more than labels. As Skinner put it, volatility is not the same as risk: paying too much for a business can be far more dangerous than watching its share price move around.
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.
