Recession fears are on the rise, and many investors are beginning to lose confidence in the market.
Weekly surveys from the American Association for Individual Investors show that investors are becoming less optimistic about the future. In mid-January 2026, around 50% of survey participants felt "bullish" about the market. That figure has steadily dropped since then, now with only 35% of investors feeling optimistic.
This doesn't necessarily mean that a recession is around the corner, but it's still wise to prepare your portfolio accordingly just in case. While all investments are vulnerable to short-term volatility, these three exchange-traded funds (ETFs) could be more resistant to significant downturns.
1. Schwab U.S. Broad Market ETF
If you're worried about market volatility, a broad market fund like the Schwab U.S. Broad Market ETF (SCHB 1.27%) is one of the more reliable choices.
This ETF targets the market as a whole, holding nearly 2,500 stocks of all sizes across all industries. The market itself has survived every recession, crash, and correction it's ever faced, so an ETF aiming to replicate the market's overall performance is incredibly likely to weather future volatility, too.
NYSEMKT: SCHB
Key Data Points
Again, no investment is immune to drawdowns, so this ETF will still experience some degree of turbulence. But with its extremely broad diversification, it will likely be less volatile than, say, a tech-focused ETF or a growth ETF.
2. Vanguard Consumer Staples ETF
Broad-market funds can be smart buys for those seeking maximum diversification across all industries. But if you're looking for a more targeted ETF, the Vanguard Consumer Staples ETF (VDC +0.12%) could be a smart option.
The consumer staples industry is one of the more recession-resistant industries, as these companies often thrive regardless of general economic conditions. After all, consumers still tend to spend money on packaged food, personal care products, and household items even during recessions.
NYSEMKT: VDC
Key Data Points
Keep in mind, though, that any ETF that focuses on just one sector of the market will carry more risk. If you choose to invest in the Vanguard Consumer Staples ETF, be sure that the rest of your portfolio is well-diversified with a selection of stocks or funds from a variety of industries to provide balance.
3. Invesco S&P 500 Equal Weight ETF
A standard S&P 500 ETF is a market-cap-weighted fund, meaning the largest companies make up the largest proportion of the fund. This can be a good thing, as investing more heavily in fast-growing stocks can result in higher earnings.
However, as tech companies grow at breakneck speed, a handful of tech stocks now account for around one-third of the S&P 500. Because tech can be incredibly volatile -- especially during downturns -- market-cap-weighted S&P 500 ETFs may carry more risk than many investors realize.
A potential solution? An equal-weight fund, like the Invesco S&P 500 Equal Weight ETF (RSP 0.80%). This ETF holds all the companies in the S&P 500, but each stock makes up roughly the same percentage of the portfolio. This provides exposure to fast-growing tech companies without overwhelming the fund with a single industry.
NYSEMKT: RSP
Key Data Points
The downside of an equal-weight ETF is that it can earn lower returns than a market-cap-weighted ETF. Again, fast-growing companies tend to deliver higher returns over time, so when those stocks are weighted the same as underperformers, it can limit growth potential. However, if your primary goal is to manage volatility, sometimes those lower returns may be a worthwhile trade-off.
Nobody knows when the next recession or bear market will begin, but it pays to prepare in advance. With a well-diversified collection of healthy stocks or funds, your portfolio is far more likely to survive whatever the market throws at it.
