3 ASX ETFs with a focus on global defensive shares

Amidst recent sell-offs, many investors may now be increasing their positions in global defensive shares. 

Defensive stocks are typically in specific sectors that are resilient amid economic downturn. 

With the recent conflict in the Middle East, many sectors have been heavily impacted such as materials and financials. 

As these situations develop quickly, it can be difficult to identify which companies will be directly impacted, and which are suffering from a more general “risk-off” sentiment. 

In times of global conflict, investors may decide to push towards defensive shares. 

These three ASX ETFs aim to hold companies or assets that tend to remain stable during economic downturns.

iShares Global Consumer Staples ETF (ASX: IXI)

One sector often considered a defensive one is consumer staples. 

Put simply, consumer staples are items people need rather than want. People will continue to buy these items regardless of their financial situation.

These are typically companies that produce everyday household goods such as food, beverages, and personal care products. 

Demand for these items remains relatively stable even when the economy weakens.

The iShares Global Consumer Staples fund aims to provide investors with the performance of the S&P Global 1200 Consumer Staples Sector Index. 

The index is designed to measure the performance of global consumer staples companies and may include large-, mid- or small-capitalisation stocks.

It includes blue-chip companies like Walmart (NYSE: WMT), Coca-Cola (NYSE: KO) and Nestle S.A. (XSWX: NESN). 

The fund has a strong track record, with a five year annual return of roughly 10%. 

iShares Global Healthcare ETF (ASX: IXJ)

Much like consumer staples, healthcare is considered a defensive sector as access to medicine, hospital services etc are essential regardless of economic downturns. 

This ASX ETF from iShares is designed to measure the performance of global biotechnology, healthcare, medical equipment and pharmaceuticals companies and may include large-, mid- or small-capitalisation stocks.

It includes exposure to pharmaceutical, biotechnology, and medical device companies. 

BetaShares Australian Quality ETF (ASX: AQLT)

Rather than targeting a particular defensive sector, this fund from Betashares includes 40 companies. 

These companies are chosen based on ‘quality’ metrics of high return on equity, low leverage and relative earnings stability.

High-quality companies often perform more defensively because they tend to have stronger balance sheets and resilient earnings. 

According to Betashares,it has tended to have different sector weightings to benchmark Australian equities indices, with higher exposure to sectors such as consumer discretionary and lower exposure to the materials (mining) sector. 

It’s important to note this focuses on Australian companies rather than global stocks. 

So far, the strategy of this fund has paid off, as it has risen almost 12% in the last year. 

The post 3 ASX ETFs with a focus on global defensive shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.