Let's be honest – it's been a rough few years. We've suffered through a global pandemic, monster rises in interest rates, the worst inflation in decades, and multiple – still ongoing – global military conflicts.
And all this risk and uncertainty has wreaked untold havoc on global stock markets. It's begun to feel like just as things start looking up, a new destabilising event comes along and rocks the stock markets all over again.
Here at the Fool, we understand how nauseating market volatility can be. And we know that no amount of upbeat articles explaining how share price corrections are just a normal part of a well-functioning market makes them any less anxiety-inducing to actually live through.
But there are some steps you can take to reduce the impact of market volatility on your portfolio.
Safe-haven assets and defensive shares are types of investments that don't typically exhibit the same level of price volatility as riskier shares. This means that they often preserve their value in a crisis – even if the rest of the market is tanking. These shares are unlikely to provide stellar growth opportunities, but adding some of them to your portfolio could help prop it up in a downturn.
So in this article, we look at 5 top ASX share contenders for turbulent times!
CSL Ltd (ASX: CSL)
The first share on our list is ASX healthcare giant, CSL. Healthcare is a great sector to invest in if you're worried about the economy.
Healthcare companies – particularly mature, well-established ones like CSL – tend to remain profitable even when the rest of the economy is struggling. This can make them great defensive shares to add to your portfolio.
CSL is a biopharmaceutical company that specialises in developing treatments for serious medical conditions. This includes vaccines for illnesses like polio and whooping cough, antivenom for snake and spider bites, and lifesaving medical treatments derived from human blood plasma. CSL makes well over US$2 billion in net profit each year, and somehow still manages to spend over US$1 billion on researching and developing new products. This makes it one of the safest ASX healthcare shares to own.
Woolworths Group Ltd (ASX: WOW)
Consumer staples are another sector of the economy that tends to remain resilient in a downturn.
Staples include household essentials like groceries, cleaning products, personal hygiene products – even alcohol and tobacco. Because they are necessities, consumer staples are usually among the last products households will cut back their spending on when times are tough.
Stable levels of demand mean consistent profits for consumer staples companies, even if the economy is experiencing a recession.
As the operator of the largest supermarket chain in the country, Woolworths is the dominant player in the ASX consumer staples sector. The ongoing Senate inquiry into supermarket pricing has caused a bit of tumult in the sector recently, but Woolworths remains a good long-term play for those looking to de-risk their portfolio.
Telstra Group Ltd (ASX: TLS)
In the modern world, phone and internet access is about as necessary for human survival as food and water. It's how we communicate, shop, work – our entire economy relies on it.
When Telstra's main rival Optus had a nationwide outage in 2023, it was estimated to have impacted 400,000 businesses. Life, as we knew it, ground to a screeching halt.
Because the internet is so necessary in our daily lives, telecommunications shares can be good investments to own in turbulent times (provided they keep their networks running!). Consistently high demand means telcos tend to generate predictable profits regardless of the state of the broader economy. Telstra holds the largest market share among Australian telcos and it also has a long history of paying healthy dividends to its shareholders.
Global X Physical Gold ETF (ASX: GOLD)
This list wouldn't be complete without at least a couple of exchange-traded funds (ETFs).
ETFs are a great way to instantly diversify your portfolio. Investing in an ETF can provide you with exposure to whole sectors of the stock market in just a single trade – some can even give you access to entirely different asset classes.
That's the case with the Global X Physical Gold ETF. Buying units in the fund gives you exposure to the price of gold, the king of safe-haven investments. Throughout history, gold has always been seen as valuable, meaning that investors often flock to it in a crisis. This increase in demand often results in the price of gold actually rising when other financial markets are imploding. This could help stabilise the value of your portfolio if the share market goes belly-up.
VanEck FTSE Global Infrastructure Hedged ETF (ASX: IFRA)
The last contender on our list of shares to own for turbulent times is another ETF. As the name suggests, VanEck's Global Infrastructure Fund invests in a diversified portfolio of international infrastructure shares.
Among its largest holdings are Australian toll-road operator Transurban Group (ASX: TCL), Auckland International Airport Ltd (ASX: AIA) and leading US electric utility company American Electric Power Company Inc (NASDAQ: AEP).
In fact, around 50% of the fund is allocated towards utilities companies. Like telcos, utilities tend to generate consistent revenues regardless of economic conditions. This could make the Global Infrastructure Fund another good option for investors who want more stability in their share portfolios.
