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Often, but not reliably—and “safer” does not mean safe. Defensive stocks and low-volatility strategies have sometimes lost less than broad-market benchmarks in downturns, but they remain equities and can fall sharply. Their results depend on what “defensive” means, how a portfolio is built, and which market episode you examine.
What “safer” means for defensive stocks
Defensive is a relative description, not a promise of positive returns or protection of your principal. It can refer to stocks in sectors such as consumer staples, health care, or utilities; to lower-beta or lower-volatility stocks; or to strategies that screen for quality or dividends. These approaches are related, but they do not produce interchangeable portfolios.
It also matters which risk you mean. Volatility and beta describe how variable or market-sensitive returns have been. Maximum drawdown measures the fall from a previous peak to a subsequent low. A strategy can have lower volatility yet still lose money, suffer a large drawdown, or underperform the broad market in a particular crash. Rupert Watts of S&P Dow Jones Indices put it plainly: “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 DJI, March 25, 2020)
What historical downturns show
Global defensive sectors held up in four severe drawdowns
A S&P Dow Jones Indices study examined four global-market drawdowns of at least 20% from December 31, 1994, through 2020. Across those episodes, the S&P Global BMI TR lost an average of 40%. Consumer staples, health care, and utilities instead posted average gains of 26%, 16%, and 15%, respectively. Those figures describe that particular sample of four drawdowns; they are not a rule for every market, country, or future crisis. (S&P DJI, June 24, 2020)
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The March 2020 selloff showed both resilience and limits
In March 2020, the S&P Global BMI TR fell 14.3%, its third-worst month in the preceding 25 years, according to the same S&P DJI study. Global health care, consumer staples, and utilities outperformed that benchmark by 9.9%, 8.9%, and 2.4%, respectively. These are relative-return differences in one month—not evidence that every defensive stock rose or that investors were shielded from losses.
Factor strategies did not behave alike in 2020
In a separate U.S. comparison of the 2002, 2009, and 2020 bear markets, S&P DJI 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, however, Quality outperformed while Low Volatility underperformed. A “defensive” label therefore cannot tell you how a strategy will perform in every downturn. (S&P DJI, September 18, 2020)
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Why a defensive strategy can still disappoint
Lower volatility can come with less participation in rallies
Low-volatility strategies typically aim to fall less when markets decline, but they may also rise less when markets climb. In S&P DJI’s analysis, the S&P 500 Minimum Volatility Index delivered nearly the S&P 500’s return with 16% lower risk from January 1991 through May 2021. That is a result for that index and period, not a forecast or a guarantee that lower risk will translate into better returns over another interval. (S&P DJI, June 29, 2021)
Do these 3 things before closing this tab:
1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsSector and stock weights affect the outcome
Sector-based defensive portfolios depend on which industries and companies they hold and how those holdings are weighted. Factor indexes have their own selection and weighting rules. S&P DJI noted that real-estate and utility exposures hurt its Low Volatility Index during a difficult week early in the 2020 selloff. A portfolio built around a defensive label can therefore have meaningful concentration risks. (S&P DJI, March 25, 2020)
Relative performance can reverse over longer periods
Vanguard reported that, over the decade ending October 31, 2025, the S&P Low Volatility Index gained 9.2% versus 14.6% for the S&P 500. Vanguard linked the gap to a period of exceptionally high market returns and discussed changing valuation relationships; those are Vanguard’s interpretation, not settled forecasts. It also notes that lower-beta stocks have historically held up better in bear markets and lower-return regimes, while warning that past performance does not guarantee future results. (Vanguard, accessed October 4, 2026)
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare defensive investments
Compare alternatives on a like-for-like basis: use the same benchmark, geography, return type, and dates. Global sector evidence and U.S. factor-index results come from different markets and samples, so they should not be blended as if they measured the same strategy.
- Peak-to-trough loss and recovery time: Check how far the investment fell from its prior high and how long it took to regain that level.
- Risk in both directions: Review beta and standard deviation during down markets as well as rallies. Lower variability alone does not show the size of a worst-case loss.
- Holdings and construction: Inspect sector and single-stock concentrations, index selection rules, and weighting methods rather than relying on a “defensive” label.
- More than one episode: Compare performance in different downturns and in the recovery afterward. One crisis or one month is not enough to establish a dependable pattern.
- Valuation and yield: Treat these as dated characteristics, not protection. They can change and do not ensure that a stock or strategy will fall less.
Check whether reported returns are total returns or price returns when the source specifies it, and make sure you are comparing the same measure. Historical figures above refer to the particular indexes and time periods named; they do not establish that a current fund or portfolio will replicate those results.
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