2 defensive ASX ETFs to add to a well-balanced portfolio

The iShares Global Consumer Staples ETF (ASX: IXI) is 1 of the 2 defensive ASX ETFs I think investors should consider today

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I think exchange-traded funds (ETFs) are some of the best investments you can buy from a diversification standpoint. A share-based ETF normally works by holding a basket of shares within it. Thus, when you buy an ETF, you are really buying whichever shares that ETF holds. In this way, you can add 'one share' to your portfolio, when really you're adding the 50, 100 or even 1,000 different shares within it.

Some ETFs are more growth focused. Others are more defensive – offering some theoretical protection in a market crash or economic recession. Here are 2 defensive ASX ETFs that I think any investor can add to their portfolio for diversification and balance.

2 defensive ETFs for a well-balanced portfolio

iShares Global Healthcare ETF (ASX: IXJ)

Our first defensive ETF tody is this healthcare-focused fund from Blackrock's iShares. The ASX EFT has a few high-quality health care names, like CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC).

However, I think the global companies that IXJ holds offer a lot more. This ETF is heavily weighted (67.5%) towards the United States, as well as Switzerland (9.7%), Japan (6.3%) and the United Kingdom (4.17%). Some of IXJ's top holdings include Johnson & Johnson (the name behind Band-Aids and Listerine), Novartis, Pfizer and Abbott Laboratories, plus 107 others.

This ETF covers an evergreen sector in healthcare and has returned an average of 16.48% per annum over the past decade. Thus, I think it's a top choice for any portfolio today.

iShares Global Consumer Staples ETF (ASX: IXI)

Another iShares ETF, this fund instead tracks a global basket of consumer staples shares. Consumer staples are defined as goods we all 'need' rather than 'want'. These typically include food, drinks, household essentials and vices.

Think about it, no matter the economic circumstances, we all need to buy food, toilet paper, laundry powder and soap. This simple fact can make the companies in this sector very powerful investments. We have seen this in play in 2020 especially. While consumers around the world were shunning all kinds of purchases in the midst of the COVID-19 pandemic, demand for these 'staples' held up extremely well.

IXI includes companies like Coca-Cola, Nestle, PepsiCo, Walmart, Diageo,  British American Tobacco, Procter & Gamble and Unilever. Like IXJ, it's also heavily weighted towards the United States (53.55%). IXI's holdings feature very old and very established companies, some of which pay hefty dividends as well.

This ETF has delivered an average return of 12.10% over the past decade. It also comes with a trailing dividend/distribution yield of 2.01%. For a defensive and robust holding that can fit in any ASX portfolio, I think IXI is another top choice today.

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Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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