All-weather ASX ETFs to buy if the market crashes 20%

Every veteran investor knows markets crash. The question is never whether it will happen. It is whether there is a plan ready for when it does.

History is clear on this point. The share market’s biggest single-day and weekly gains have almost always followed its worst periods. Investors who panic-sold in March 2020, in the 2022 rate shock, or during the GFC did not just lock in losses — they missed the recoveries that followed. Those recoveries have been among the greatest wealth-creation events of a lifetime.

So if the S&P/ASX 200 Index (ASX: XJO) fell 20% from here, what might a prepared investor actually do?

Buy. Deliberately. With a list already prepared.

Save like a pessimist, invest like an optimist

One framework worth considering starts well before a crash arrives. Keeping a cash buffer — not out of fear, but out of preparation — creates “dry powder”. It is what allows an investor to lean into fear when others are running from it.

When the drop comes, the goal is not to pick the exact bottom. That is a fool’s (small “f”!) errand. The aim is simply to be in the market when it recovers. Perfect positioning is not required. Participation is.

The core of a sensible crash-buying approach is broad, low-cost index exposure to the two most important share markets in the world.

For Australia, the Vanguard Australian Shares Index ETF (ASX: VAS) tracks the 300 largest companies on the ASX. Banks, miners, healthcare, consumer staples — all in one basket. When the market is down 20%, the case for owning the whole market rather than trying to pick survivors becomes even stronger.

For the United States, the iShares S&P 500 ETF (ASX: IVV) offers unhedged S&P 500 exposure, while the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) removes currency noise for investors who prefer not to carry AUD/USD risk.

Together, VAS and either the IVV or IHVV ETF can form the core of a portfolio: stable, diversified, and built to survive almost anything.

The satellite: growth where it matters most

A core-only portfolio is robust, but not particularly positioned for growth. That is where a satellite allocation can earn its place.

The focus here is not on chasing every trend. The more compelling case is for two structural shifts that look likely to reshape the global economy over the next decade: robotics and AI infrastructure.

The Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ) provides exposure to companies developing and deploying robotics and AI — from industrial automation to unmanned systems. When markets fall broadly, quality companies in transformational sectors often fall just as hard as everything else. That is the potential entry point.

The other satellite worth watching is the Global X Artificial Intelligence Infrastructure ETF (ASX: AINF). While most attention focuses on the software and chip layer of AI, AINF sits beneath all of that — in the energy systems, data infrastructure, and materials that make AI physically possible. Global data centre spending is expected to exceed US$2 trillion over the next five years. That is not a trend. That is a building site.

A core-satellite approach does not mean splitting things equally. The core should represent the bulk of any position — perhaps 70–80% — with satellite ETFs taking a smaller, higher-conviction slice.

The Foolish takeaway

A 20% market crash would be uncomfortable. It always is. But discomfort and danger are not the same thing for a long-term investor with a prepared portfolio and cash ready to deploy.

The investors who tend to build real wealth are rarely the ones with the cleverest trades. They are the ones who stayed calm, kept buying, and let the market do its work over time. Having a watchlist of ETFs ready before the market falls is how that patience gets put to work.

The post All-weather ASX ETFs to buy if the market crashes 20% appeared first on The Motley Fool Australia.

More reading

• 3 ASX ETFs with market-beating potential over the next 10 years
• Is this ASX ETF the perfect companion to Vanguard’s VAS?
• Are these the best ASX ETFs to buy with $1,000 in May?
• ASX ETF investors exit US stocks in favour of Aussie shares: Betashares
• How I’d use the iShares S&P 500 ETF (IVV) to create $50,000 annual passive income

Motley Fool contributor Leigh Gant has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.