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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsOften, but only in a relative and historical sense. Defensive stocks and strategies built around lower volatility have sometimes lost less than broad equity benchmarks in market downturns. They are still stocks, though: they can fall sharply, lag the market, or fail to cushion losses in a particular selloff. “Defensive” is not a guarantee of positive returns or protection of principal.
What “safer” means for stocks
For an equity investment, “safer” usually means that returns have been less volatile or less sensitive to the broader market—not that the investment cannot lose money. Volatility and beta describe how variable or market-sensitive returns have been. Maximum drawdown measures the decline from a previous peak to a later trough. These measures answer different questions: a strategy can have lower volatility yet still experience a substantial peak-to-trough loss.
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Defensive stocks can mean several different things: companies in traditionally defensive sectors, such as consumer staples, health care, and utilities; lower-beta or lower-volatility stocks; companies selected for quality characteristics; or dividend-focused portfolios. Those approaches are not interchangeable. A sector portfolio’s results depend on which industries it holds, while a factor index depends on its screening and weighting rules.
As S&P Dow Jones Indices’ Rupert Watts put it in March 2020, “Defensive equity indices are, after all, still equities; we hope that they will mitigate losses in the underlying benchmarks, but they’ll still go down, perhaps substantially.” (S&P Dow Jones Indices, March 25, 2020.)
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What historical downturns show
Global defensive sectors held up in one severe-drawdown sample
A 2020 S&P Dow Jones Indices study examined four global market drawdowns of at least 20% between December 31, 1994, and the study period in 2020. Across those episodes, the S&P Global BMI TR lost an average 40%, while consumer staples, health care, and utilities recorded average gains of 26%, 16%, and 15%, respectively. Those figures describe that specific set of four historical drawdowns; they are not a forecast or a rule that applies to every market or every defensive portfolio.
The same study reported that the S&P Global BMI TR fell 14.3% in March 2020, its third-worst month in the preceding 25 years. In that month, global health care, consumer staples, and utilities outperformed the benchmark by 9.9%, 8.9%, and 2.4%, respectively. A one-month result during the early COVID-19 selloff is a distinct comparison from the four-drawdown averages above. (S&P Dow Jones Indices, June 24, 2020.)
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Factor strategies did not behave alike in every bear market
A separate S&P Dow Jones Indices comparison of U.S. bear markets in 2002, 2009, and 2020 found that both the S&P 500 Quality Index and the S&P 500 Low Volatility Index had lower volatility than the S&P 500. Both outperformed in the 2002 and 2009 bear markets. In 2020, Quality outperformed, but Low Volatility underperformed. That exception matters: a lower-volatility label did not ensure better performance in every downturn in the comparison. (S&P Dow Jones Indices, September 18, 2020.)
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S&P Dow Jones Indices describes low-volatility approaches as typically rising less in rising markets and falling less in falling markets. Their benefit therefore depends on the market environment and the period being assessed. In its analysis of the S&P 500 Minimum Volatility Index, the index delivered nearly the S&P 500’s return with 16% lower risk from January 1991 through May 2021. That is a result for one index and one historical period, not a promise that another low-volatility portfolio will match it. (S&P Dow Jones Indices, June 29, 2021.)
Why defensive investments can still disappoint
- They remain exposed to equity losses. A defensive portfolio may decline substantially when stocks fall; lower measured volatility does not mean capital protection.
- Sector and stock weights matter. A sector strategy can be concentrated in a small set of industries or companies. Index design, selection rules, and weighting can produce meaningfully different portfolios, even when they share a defensive label.
- Some holdings can hurt in a selloff. In an early-2020 selloff snapshot, S&P Dow Jones Indices noted that real-estate and utility exposures hurt its Low Volatility Index during a difficult week. That preliminary episode illustrates why a strategy’s actual holdings matter more than its label. (S&P Dow Jones Indices, March 25, 2020.)
- Defensive exposure can lag during strong markets. A portfolio that tends to participate less in rising markets may trail a broad index when gains are strong. That trade-off can be important over a full investing horizon, even if the strategy cushions some declines.
- Valuations and yields change. A stock’s current valuation or dividend yield does not ensure downside protection. Both characteristics need to be assessed using a stated date and method, and neither makes a company immune to market or business risks.
Recent relative performance is not a guarantee of future protection
In an article using data through October 31, 2025, Vanguard reported that the S&P Low Volatility Index gained 9.2% over the prior decade, compared with 14.6% for the S&P 500. Vanguard attributed the comparison in part to an exceptionally high-return period for the broader market and discussed changing valuation relationships; those are Vanguard’s explanations, not certain forecasts. The figures illustrate that a strategy designed to reduce downside risk can lag over a long period that includes strong market gains. Vanguard also notes that lower-beta stocks have historically held up better in bear markets and lower-return regimes, while cautioning that past performance does not guarantee future returns. (Vanguard, accessed October 4, 2026.)
Vanguard also reported cumulative outflows of $239 billion from defensive-equity strategies since the end of 2022, using Morningstar data as of October 30, 2025. Fund flows show investor activity, not whether a defensive strategy is safer or likely to perform better in the next downturn.
How to compare defensive strategies fairly
Before treating a fund or index as a potential cushion, compare it with its benchmark on consistent terms. Global sector results and U.S. factor-index results are not one unified sample: they use different geographies, benchmarks, time periods, and strategy definitions.
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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →- Define the strategy and benchmark. Identify whether the exposure is sector-based, low-volatility, quality, dividend-focused, or a combination. Use the same geography and a relevant broad-market benchmark.
- Match the dates and return basis. Compare the same market episodes and specify whether figures are total returns or price returns when the source provides that detail. Do not mix a one-month selloff with a multi-year or multi-drawdown result as if they measured the same thing.
- Check losses and recovery, not volatility alone. Look at peak-to-trough drawdown and the time needed to recover, alongside standard deviation and beta. Lower volatility does not by itself establish a smaller maximum loss or a faster recovery.
- Inspect the portfolio construction. Review sector and single-stock concentrations, selection criteria, and weighting rules. A strategy’s label cannot tell you whether its actual exposures fit your risk concern.
- Test more than one market regime. Compare bear markets, the recoveries that followed, and rising markets. A strategy may help in some downturns but lag during rebounds or strong bull markets.
- Treat yield and valuation as dated characteristics. If these factor into a comparison, state the date and method. Neither a high yield nor an apparently attractive valuation guarantees resilience.
So, are defensive stocks safer?
They have sometimes been safer in the limited sense of losing less or showing lower volatility than a broad equity benchmark, but the advantage varies by strategy and downturn. Historical sector results and factor-index comparisons offer evidence of potential cushioning—not a dependable shield against losses. A useful decision is therefore not whether an investment is called defensive, but whether its measured downside, recovery history, portfolio exposures, and trade-offs fit the role you expect it to play.
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