One of the hardest parts about investing is sticking with your shares when there's a downturn. You might be able to rest easy if you had defensive ASX shares.
Market sell-offs can affect every business. Share prices fell in every sector of the ASX during the GFC.
However, the profit of those businesses didn't fall in unison.
If another global recession happens, will your shares make it through? I hope so! It's only when times get truly rough when you learn which shares are 'dangerous'.
By planning ahead before a recession you can fill your portfolio with high-quality defensive ASX shares.
Here are two shares that can fit the defensive bill:
Duxton Water Ltd (ASX: D2O)
Duxton owns water entitlements which are leased to agricultural businesses.
The agriculture sector likes to toot its own horn by saying its returns are not really correlated to the share market or even the economy. I'd generally agree. Duxton Water could be a way to invest indirectly into the agricultural industry.
Water is one of the most important commodities on the planet and Duxton Water owns a tiny slice of Australia's freshwater supply.
If dry conditions persist over the next 12 months then Duxton Water may be able to continue to grow its lease income and its underlying value. However, I'm focused on the long-term potential not just the next year.
It currently has a partially franked dividend yield of 3.6%.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is Australia and New Zealand's second largest funeral operator.
During the GFC, one of the most reliable businesses on the ASX was InvoCare Limited (ASX: IVC). The newer, smaller competitor could be a good one to invest in at the moment due to the current difficult trading conditions of the lower-than-expected death rate.
Its share price has dropped to $2.70, but its value continues to get better in my opinion. A certain number of Australians die every year, which gives Propel an almost-guaranteed level of funerals each year. As Propel acquires other small funeral operators it expands its potential addressable market into new geographical areas.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.
Propel is trading at 20x FY19's estimated earnings with a projected forward grossed-up dividend yield of 5.1%.
Foolish takeaway
Owning defensive shares could be what lets you sleep easy at night during a downturn. I feel much better knowing the above two shares are decent positions in my portfolio.
