7 ETFs to Hedge Against a Stock Market Crash
These funds focus on defensive securities that still produce solid returns even when markets are in crisis mode.
The U.S. stock market has performed very well so far this year. As of Oct. 24, the S&P 500 has a year-to-date total return – that is, including dividends – of 21.8%. That’s about 70% higher than the S&P’s 10-year annualized total return of 12.8%, and there are still two months left to go.
While investors have reasons to rejoice in the past performance of their equity holdings, a measure of caution is warranted. Unfortunately, stock market crashes and corrections are part of investing, and smart investors should always be prepared for them.
The most famous market crash happened in October 1929, catalyzing what would become the Great Depression. Overall, the stock market lost almost 30% of its value between Oct. 24 and Oct. 29 of that year, and fully 79% from its pre-crash peak to the lowest point of the Depression era. The market crashed again almost a decade later, giving back 49% of its value between August 1937 and March 1938.
