Market Downturn: 3 ETFs That Could Protect Your Portfolio in 2022

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The S&P / TSX Composite Index It rose 376 points on April 28. This three-digit increase was a much-needed recovery after Canada’s top index suffered heavy losses earlier in the week. Despite this recovery, investors should not rest. In fact, there are a variety of headwinds that Canadians should watch out for in the coming weeks and months. Some top economists are forecasting a recession over the next two years in the face of slowing growth and policy tightening interest rates from the Bank of Canada (BoC).

Today, I want to take a look at three exchange-traded funds (ETFs) that can protect your portfolio from volatility in 2022 and beyond.

Defend against increased volatility with the BMO Index ETF

Canadian Stock ETF Low Volatility BMO (TSX: ZLB) is the first ETF that I would expect to crash in this turbulent market. This fund seeks to provide investors with exposure to a beta-weighted portfolio of Canadian equities. For reference, beta measures the sensitivity of a particular security to market fluctuations. The ETF uses a methodology to build a portfolio of low-volatility, high-cap Canadian stocks.

ETF shares have increased 2.1% in 2022 as of the close on April 28. The fund is up 10% in the same period last year. Some of the highest holdings on this account include some familiar defensive dividend stocks such as Hydro oneAnd metroAnd waste connections. Investors can trust utilities, grocery retailers, and a company like Waste Connections for the long-term.

Find exposure to the top defensive stocks with an ETF

As I discussed in the previous section, Canadian investors should look to target defensive stocks in the face of market volatility. Often these are companies that are consumer staples. The products offered by basic consumer goods include food, beverages, household goods and other necessities. Investors looking to target these stocks should consider iShares S&P / TSX Capped Consumer Staples ETF (TSX: XST).

According to its fund facts, the ETF seeks to replicate the performance of the Capped Consumer Staples Index. Its shares are up 7.3 percent in the year-to-date period. The ETF is up 23% from the same time in 2021. Some of the top holdings in the ETF include top defensive stocks like Nutrition Couche-TardAnd George WestonMemo processing giant Saputo.

Another fund to offer a conservative approach in 2022

iShares Core Conservative Balanced ETF (TSX:XCNS) is the third institution I’m looking to grab in this volatile market environment. This fund aims to provide long-term capital and income growth by investing in other ETFs that it manages Black stone or subsidiary company. As per its fund facts, it is listed as low risk. This should tempt Canadian investors who are hungry for safety and stability in their portfolios for the time being.

Some of the top holdings in this fund include the major Canadian BlackRock Bond Index as well as a fund focused on US Treasuries. The bond collapse has hurt this ETF in the short term. Its shares are down 9% so far in 2022. That has pushed it into negative territory in the same period last year.

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