Best Recession-Proof ETFs Right Now

Investors concerned about an economic downturn often look for assets that can better weather a recession. Certain exchange-traded funds (ETFs) have historically shown resilience during bear markets and recessions, thanks to defensive sector focus, lower volatility and capital-preservation strategies. 

Defensive equity sectors—like consumer staples, health-care and utilities—tend to hold up relatively well as demand for essentials remains steady even in a slowdown. High-quality bonds (like U.S. Treasurys) and low-volatility or risk-managed funds can also help cushion portfolios when risk assets falter. 

In selecting top recession-resistant ETFs, Benzinga prioritized historical drawdown performance, defensive sector allocations, capital-preservation features (e.g., low-vol or hedging overlays), consistent dividend income, low expenses and ample liquidity. Combined, the factors can indicate an ETF’s ability to preserve capital during market turmoil while still delivering modest growth or income.

Quick Look at the Best Dividend ETFs:

Below Benzinga presents five top U.S.-listed ETFs (excluding primarily international funds) that are well-positioned for recessionary environments as of June 2025. All five combine strong defensive characteristics—from low-volatility stock selection and high dividend yields to Treasury holdings and tactical hedging rules—and have substantial assets under management (AUM) and trading liquidity (reducing fund-closure risk and trading costs).

1. iShares MSCI USA Min Vol Factor ETF (USMV)

The iShares MSCI USA Min Vol Factor ETF uses an optimization process to hold roughly 180 of the least-volatile U.S. large- and mid-cap stocks. That screen naturally overweights recession-friendly groups like health-care, consumer staples and utilities while underweighting high-beta tech. Its three-year beta sits near 0.67, and it lost about 9% in the 2022 bear market versus 19% for the S&P 500 (ARCA: SPY). The trade-off is muted upside during roaring bull runs, but the fund’s 12-year record shows superior risk-adjusted returns.

Investors also get rock-bottom pricing (0.15%) and deep liquidity ($24 billion AUM). A modest 1.5% yield adds a little income without sacrificing quality.

2. Invesco S&P 500 Low Volatility ETF (SPLV)

Invesco S&P 500 Low Volatility ETF holds the 100 calmest stocks in the S&P 500, rebalanced quarterly. That rules-based approach currently produces hefty stakes in utilities (20%), consumer staples (15%) and real estate (11%), sectors that historically post shallower earnings declines in recessions. SPLV’s maximum drawdown during the 2020 COVID crash was 26% (versus the S&P’s 34%), and it finished 2022 essentially flat while the broader index tumbled. 

A 1.7% yield and monthly dividends sweeten the deal. At 0.25% in fees, SPLV is pricier than USMV but still reasonable for a specialty factor fund.

3. Consumer Staples Select Sector SPDR Fund (XLP)

The Consumer Staples Select Sector SPDR Fund delivers pure-play exposure to the consumer-staples sector—companies that sell food, beverages, household products and other essentials that remain in demand regardless of the economic backdrop. 

In every U.S. recession since 1990, staples have been top-three performers, and XLP’s own 2022 decline was less than 1% while the S&P 500 fell double-digits. The ETF charges a razor-thin 0.08% and manages more than $16 billion, ensuring tight spreads. 

Its 2.5% dividend yield is above-market and backed by stable cash flows from global staples giants, making XLP a straightforward defensive cornerstone.

4. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

The Invesco S&P 500 High Dividend Low Volatility ETF mixes defense with income, selecting the 50 highest-yielding S&P 500 names that also sport the lowest 12-month price volatility. The current portfolio tilts toward REITs, utilities and consumer staples—sectors that supply resilient cash flows and above-average dividends. 

Its trailing yield tops 3.4%, paid monthly. The strategy helped SPHD sidestep the worst of 2022; the fund ended that year roughly flat. A 0.30% expense ratio is acceptable for a niche index, and $3 billion in assets keeps the fund liquid. 

Investors should note that concentration in yield-heavy sectors can occasionally backfire, but historically SPHD has balanced income with risk control better than most high-dividend funds.

5. Pacer Trendpilot US Large Cap ETF (PTLC)

The Pacer Trendpilot US Large Cap ETF adds a tactical layer that no traditional low-vol ETF offers. When the S&P 500 closes below its 200-day moving average for five straight days, PTLC shifts 50% to Treasury bills; if the moving average itself turns negative, it moves 100% to T-bills. 

That quick pivot limited PTLC’s 2022 drawdown to 9% (versus 17% for the S&P 500). Because the strategy may exit stocks entirely, the fund’s dividend yield is low (~0.6%), but investors gain peace of mind that the portfolio can go to cash if markets unravel. 

The higher 0.60% fee pays for this automatic hedging overlay—worth considering for investors who prefer a rules-based “seat belt” rather than manual market-timing.