Are index funds 100% safe?

No investment is 100% safe, except for things like a savings account, a certificate of deposit (CD), or Treasury securities. Index funds can be rather volatile, especially over short periods, so be prepared to endure significant price swings if you choose to invest.

What index fund does Warren Buffett use?

Warren Buffett has mentioned that an S&P 500 index fund is the best investment most Americans can make, and he even requested that his wife's inheritance be invested this way. He has specifically mentioned the Vanguard S&P 500 ETF as a great choice, and it has previously been in Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) portfolio in recent years.

Are index funds safer than individual stocks?

The short answer is that it depends. Index funds are typically safer than owning any one individual stock, but there's a wide range of safety when it comes to index funds. For example, while a basic S&P 500 ETF is a generally safer investment than any of its 500 components, an investment in a blue chip stock can certainly be safer than a biotechnology or cryptocurrency index fund.

How often should I review my index fund investments?

The main point in using index funds to invest is that you can essentially put your investment strategy on autopilot, so you don't need to check them too often. However, they can be worth checking periodically to see whether you need to rebalance your assets or to get a snapshot of your portfolio's performance.

What is the minimum investment required for index funds?

Mutual funds typically have a minimum investment amount, and it varies by fund. Common minimums are $500, $1,000, and $2,000. If the index fund is an ETF, you can invest by purchasing as little as one share -- or even less if your broker offers fractional share investing.

How does diversification make an index fund safer?

Simply put, if an index fund owns a lot of different stocks, it is less dependent on the performance of any one of them. If a stock that accounts for a tiny percentage of a fund's total assets suffers a big loss, the fund's overall asset value wouldn't feel much of a sting.

Can safe index funds provide steady income?

Yes, safe index funds also tend to be above-average income investments. Stock-based safe index funds typically invest in some of the more stable, cash-flowing companies in the stock market. Other safe index funds hold fixed-income investments, which are often used to generate income.

Top 9 Safest ETFs to Buy in 2026

By Matthew Frankel, CFP – Updated Aug 12, 2026 at 11:16 AM EST | Fact-checked by Frank Bass

+Fool.comon

Key Points

Vanguard S&P 500 ETF offers low fees and historical long-term gains, tracking 500 major companies.
Vanguard High Dividend Yield ETF provides stability and solid returns via dividends from 605 companies.
Vanguard Real Estate ETF invests in REITs, offering high dividends and lower volatility in challenging markets.

ETFs can be an excellent way to build an investment portfolio that isn't too dependent on the success of any particular stock or bond. In this article, we'll dive into nine top ETFs that should hold up well during turbulent times while still delivering strong long-term performance -- no matter what the economy does.

Before we proceed, it's essential to note that none of these index funds is entirely risk-free, especially over short time periods. However, these index funds offer an excellent combination of growth potential and long-term safety.

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An infographic explaining what makes index funds safer investments than individual stocks. — Image source: The Motley Fool.

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Safest ETFs to consider

By incorporating index funds like the nine exchange-traded funds (ETFs) listed here into your portfolio, you can implement a well-rounded investment strategy that can help you build wealth and sleep soundly at night.

1. Vanguard S&P 500 ETF

Legendary investor Warren Buffett has said that the best investment the average American can make is a low-cost S&P 500 index fund, such as the Vanguard S&P 500 ETF (VOO +0.61%). As its name implies, the ETF invests in all 500 companies that comprise the S&P 500 large-cap index and aims to track the index's performance over time.

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NYSEMKT: VOO

Vanguard S&P 500 ETF

Today's Change

(0.61%) $4.31

Current Price

$715.59

Key Data Points

AUM

$1.8T

Dividend Yield

1.04%

Expense Ratio

0.03%

Top Holdings

NVDA

8.09%

AAPL

7.04%

MSFT

5.70%

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With a rock-bottom 0.03% expense ratio, your annual investment fees will be just $0.30 for every $1,000 in fund assets. For all of these funds, note that an expense ratio isn't a fee you have to pay. It will simply be reflected in the index fund's performance over time.

To be sure, the S&P 500 isn't necessarily a safe investment over short periods. The index has historically fallen by 20% or more from recent highs every few years.

However, over time, you might be surprised by how consistent the performance of the S&P 500 has been. From 1965 through the end of 2025, the S&P 500 delivered annualized total returns of 10.5%. Performance like this can build tremendous wealth over long periods.

2. Vanguard High Dividend Yield ETF

The Vanguard High Dividend Yield ETF (VYM +0.32%) tracks an index of stocks that have above-average dividend yields. The fund has a 0.04% expense ratio and invests in 605 stocks, including Broadcom (AVGO +0.39%), Walmart (NYSE:WMT), ExxonMobil (XOM +0.26%), and JPMorgan Chase (JPM +0.47%), among others.

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NYSEMKT: VYM

Vanguard High Dividend Yield ETF

Today's Change

(0.32%) $0.50

Current Price

$158.75

Key Data Points

AUM

$101B

Dividend Yield

2.32%

Expense Ratio

0.04%

Top Holdings

AVGO

6.94%

JPM

3.83%

XOM

2.70%

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As you might expect, the ETF has an above-average dividend yield of about 2.5% as of Summer 2026. As a group, dividend-paying stocks tend to hold up better than their non-dividend counterparts during tough times; that's exactly what we saw during the most recent bear market.

This doesn't come at the expense of long-term performance. The dividend-focused ETF tends to outperform during tough times and underperform during bull markets, but dividend stocks have historically delivered total returns roughly equal to those of the S&P 500. In a nutshell, the ETF can be a great option for investors seeking strong long-term performance with less short-term volatility than the overall market.

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3. Vanguard Real Estate ETF

Real estate investment trusts (REITs) can be a great addition to any risk-averse investment portfolio. REITs tend to pay higher dividends than the typical S&P 500 stock, have lower volatility during difficult environments, and have actually outperformed the S&P slightly over the long run. The Vanguard Real Estate ETF (VNQ +1.46%) tracks a weighted index of about 160 REITs.

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NYSEMKT: VNQ

Vanguard Real Estate ETF

Today's Change

(1.46%) $1.30

Current Price

$90.65

Key Data Points

AUM

$71B

Dividend Yield

3.76%

Expense Ratio

0.13%

Top Holdings

WELL

10.23%

PLD

8.08%

EQIX

6.39%

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The fund's top holdings include American Tower (AMT +9.30%), Prologis (PLD +0.15%), Equinix (EQIX +1.47%), and Welltower (WELL +1.09%). REITs are designed to pass most of their income to shareholders, so the fund paid a dividend yield of about 3.6% as of August 2026. Its 0.13% expense ratio is on the lower end of the ETF spectrum, so you'll retain most of the returns generated by the underlying stocks.

4. iShares Core S&P Total U.S. Stock Market ETF

Instead of choosing individual stocks or even a particular benchmark index, one way to reduce your risk is to simply invest in the entire stock market. You can do this by investing in an index fund that tracks a total market index, such as the iShares Core S&P Total U.S. Stock Market ETF. (ITOT +0.64%).

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NYSEMKT: ITOT

iShares Trust - iShares Core S&P Total U.s. Stock Market ETF

Today's Change

(0.64%) $1.08

Current Price

$169.66

Key Data Points

AUM

$98B

Dividend Yield

0.99%

Expense Ratio

0.03%

Top Holdings

NVDA

7.43%

AAPL

6.62%

MSFT

5.17%

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To be sure, the overall market can be quite volatile in the short term, but has historically produced excellent long-term returns. As the name suggests, the ETF essentially aims to match the performance of the overall U.S. stock market. It owns about 2,500 different stocks, ranging from mega-cap giants to small-cap companies. Its 0.03% expense ratio is among the lowest in the entire ETF industry.

5. Consumer Staples Select Sector SPDR Fund

If you're concerned about safety during a recession or other tough times, it can be a good idea to invest in companies that sell products people need. The consumer staples sector is full of companies that do just that, and a great index fund to invest in is the Consumer Staples Select Sector SPDR ETF (XLP +0.01%).

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NYSEMKT: XLP

Select Sector SPDR Trust - State Street Consumer Staples Select Sector SPDR ETF

Today's Change

(0.01%) $0.01

Current Price

$83.43

Key Data Points

AUM

$14B

Dividend Yield

2.63%

Expense Ratio

0.08%

Top Holdings

WMT

10.70%

COST

9.13%

7.60%

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The ETF has an expense ratio of 0.08%, which is certainly on the lower end of the spectrum for sector-specific index funds. It invests in the consumer staples companies in the S&P 500 index.

The fund's larger holdings include Costco (COST -0.10%), Procter & Gamble (PG +0.43%), Walmart, and Coca-Cola (KO +0.32%). In a nutshell, these businesses tend to perform almost as well in tough economic times as in strong ones.

6. iShares 0-3 Month Treasury Bond ETF

When it comes to safe investments, the iShares 0-3 Month Treasury Bond ETF (NYSEMKT:SGOV) is the next safest thing to simply holding cash in your portfolio. The index fund invests in a portfolio of Treasury securities with maturity dates of three months or less.

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NYSE: SGOV

iShares Trust - iShares 0-3 Month Treasury Bond ETF

Today's Change

(0.04%) $0.04

Current Price

$100.51

Key Data Points

AUM

$115B

Dividend Yield

3.65%

Expense Ratio

0.09%

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As you might imagine, this is more of a short-term cash alternative than a long-term wealth generator. Treasury securities are perfectly safe, and the fund's short maturity means your investment won't fluctuate as much with interest rate changes as comparable ETFs tracking longer-maturity bonds.

The fund has a yield of about 3.8% as of August 2026, reflecting the current interest rate environment. However, this yield can be expected to change over time as interest rates fluctuate. Its 0.09% net expense ratio makes the ETF a far more appealing way to put your cash to work than buying bonds.

7. Vanguard Utilities ETF

Few types of businesses are as recession-resistant as utilities. Consumers and businesses need to pay their electric and gas bills no matter what the economy is doing, and these businesses generally have monopolies (or near-monopolies) in the areas where they operate. An index fund like the Vanguard Utilities ETF (VPU +0.80%) that tracks the utility sector could be worth a look if safety is what you're after.

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NYSEMKT: VPU

Vanguard Utilities ETF

Today's Change

(0.80%) $1.43

Current Price

$179.15

Key Data Points

AUM

$10B

Dividend Yield

2.90%

Expense Ratio

0.09%

Top Holdings

NEE

11.77%

6.80%

DUK

6.41%

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This index fund has a 0.09% expense ratio, which is cheap for a sector-tracking ETF, and owns a basket of 72 utility stocks with a median market cap of about $45 billion. Top holdings include NextEra Energy (NEE +0.01%), Constellation Energy (CEG +4.56%), Duke Energy (DUK -0.16%), and Southern Co. (SO +0.02%).

It's quite possible that if you own or rent a home in the United States, you make regular utility payments to a company included in the index.

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It's also worth noting that, because utility companies don't require significant capital investment in areas such as research and development, they tend to pay higher dividends. As of August 2026, the Vanguard Utilities ETF had a dividend yield of about 2.5%, making it a good choice for income and safety.

8. iShares U.S. Healthcare Providers ETF

Another sector that is typically considered to be recession-resistant is healthcare, but it's important to realize that the healthcare sector is broad and contains several types of stocks that aren't necessarily safe, such as pharmaceuticals and biotech companies. So, investors looking for safety may want to take a more targeted approach, such as the iShares U.S. Healthcare Providers ETF (IHF +1.74%).

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NYSEMKT: IHF

iShares Trust - iShares U.s. Healthcare Providers ETF

Today's Change

(1.74%) $0.97

Current Price

$56.76

Key Data Points

AUM

$1.4B

Dividend Yield

0.96%

Expense Ratio

0.37%

Top Holdings

UNH

21.58%

CVS

12.35%

ELV

9.55%

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Instead of focusing on the entire healthcare sector, the index fund tracks a group of stocks that provide healthcare, diagnostics, and health insurance -- the things people need regardless of the economic environment.

The fund has a 0.37% expense ratio, which is the highest on this list by a significant margin, but it is in line with many other specialized ETFs. (As a general rule, the narrower an index fund's focus, the higher the fees.) The ETF's larger holdings include UnitedHealth (UNH +2.25%) and CVS Health (CVS -1.87%), and the index fund holds 63 healthcare provider stocks.

9. Schwab U.S. TIPS ETF

Inflation spiked to its highest level in more than 40 years in 2022 and has surged again in 2026 due to rising energy prices. Keeping money in cash isn't appealing in such an environment, as inflation can erode its purchasing power over time. In the interest of safely combating inflation, one ETF worth a look is the Schwab U.S. TIPS ETF (SCHP -0.08%).

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NYSEMKT: SCHP

Schwab Strategic Trust - Schwab U.s. Tips ETF

Today's Change

(-0.08%) $-0.02

Current Price

$25.18

Key Data Points

AUM

$16B

Dividend Yield

5.00%

Expense Ratio

0.03%

Top Holdings

GVMXX

0.00%

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This fund invests in an index linked to inflation-protected Treasury securities. Unsurprisingly, the fund's current yield is good, as it's linked to inflation.

As of August 2026, the ETF's yield was approximately 4%. Be aware that if inflation cools, the index fund's yield will be lower; if it doesn't, your money's purchasing power is safe. A 0.03% expense ratio can be a small price to pay for the peace of mind inflation resistance can provide.

Why are ETFs considered a safe investment?

ETFs are generally considered safe because:

They provide instant diversification across dozens or hundreds of holdings
They trade on exchanges like stocks, giving you flexibility and transparency
They have historically been a great way to build wealth over long periods

Benefits of investing in safe index funds

A portfolio of relatively safe index funds, such as the nine examples discussed here, can enable you to put your money to work for the long term while still sleeping soundly at night.

Of course, these index funds (especially those that are stock-based) can experience significant short-term fluctuations. But they are highly diversified and should perform well over the long run, regardless of any short-term stock market or economic noise.

Additionally, relatively safe index funds tend to be above-average dividend payers, making them excellent choices for investors who rely on their portfolios for income.

Risks of investing in safe index funds

Just because these index funds are on the safer side doesn't mean they're risk-free. There are a few important risk factors to be aware of:

Inflation and interest rates: Obviously, some of the ETFs on this list (like the TIPS fund) don't have this risk. But others can fluctuate significantly if inflation and/or interest rates rise or fall sharply.
Opportunity cost: These funds are likely to perform well over the long term, but you're sacrificing some growth potential in favor of peace of mind. For example, an index fund focused on artificial intelligence (AI) stocks will likely be volatile over short periods, but it likely has higher long-term return potential than any of the ETFs discussed here.

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How do index funds affect your portfolio?

Having index funds -- especially safer ones like these -- in your portfolio can have some major benefits. They can provide immediate diversification, especially if you own an otherwise concentrated portfolio of individual stocks. They can allow you to create steady streams of income from your investments. And they can give you the peace of mind that some (or all) of your investment portfolio is on autopilot.

The bottom line

ETFs can be a smart way to build a diverse portfolio tailored to your investment goals, whether your priorities are income, growth, stability, or a combination of the three. These ETFs are a strong starting point, each offering a distinct flavor of safety that matches your risk tolerance and time horizon.

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Safest index funds FAQ

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About the Author

Matt Frankel, CFP®, is a contributing Motley Fool stock market analyst specializing in the real estate and financial sectors. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, Globe St, The National Desk, and other TV networks and publications for his real estate, financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelUSC

JPMorgan Chase is an advertising partner of Motley Fool Money. Matt Frankel, CFP has positions in Prologis, Vanguard Real Estate ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends American Tower, Constellation Energy, Costco Wholesale, Equinix, JPMorgan Chase, NextEra Energy, Prologis, Schwab Strategic Trust - Schwab U.s. Tips ETF, Vanguard High Dividend Yield ETF, Vanguard Real Estate ETF, Vanguard S&P 500 ETF, and iShares Trust - iShares 0-3 Month Treasury Bond ETF. The Motley Fool recommends Broadcom, CVS Health, Duke Energy, and UnitedHealth Group. The Motley Fool has a disclosure policy.

Top 9 Safest ETFs to Buy in 2026

Key Points

Safest ETFs to consider

1. Vanguard S&P 500 ETF

Key Data Points

2. Vanguard High Dividend Yield ETF

Key Data Points

3. Vanguard Real Estate ETF

Key Data Points

4. iShares Core S&P Total U.S. Stock Market ETF

Key Data Points

5. Consumer Staples Select Sector SPDR Fund

Key Data Points

6. iShares 0-3 Month Treasury Bond ETF

Key Data Points

7. Vanguard Utilities ETF

Key Data Points

8. iShares U.S. Healthcare Providers ETF

Key Data Points

9. Schwab U.S. TIPS ETF

Key Data Points

Why are ETFs considered a safe investment?

Benefits of investing in safe index funds

Risks of investing in safe index funds

How do index funds affect your portfolio?

The bottom line

Related investing topics

How to Invest in Index Funds: A Beginner's Guide

7 Best ETFs to Buy in October 2026

Recession-Proof Stocks: Industries That Thrive During Recessions

5 Best Oil ETFs for 2026 and How to Invest

Safest index funds FAQ

Are index funds 100% safe?

Are index funds 100% safe?

What index fund does Warren Buffett use?

What index fund does Warren Buffett use?

Are index funds safer than individual stocks?

Are index funds safer than individual stocks?

How often should I review my index fund investments?

How often should I review my index fund investments?

What is the minimum investment required for index funds?

What is the minimum investment required for index funds?

How does diversification make an index fund safer?

How does diversification make an index fund safer?

Can safe index funds provide steady income?

Can safe index funds provide steady income?

About the Author

Read Next

Stocks Mentioned

Motley Fool Stock Advisor’s Latest Pick

Premium Investing Services

Safest ETFs to consider

1. Vanguard S&P 500 ETF

Key Data Points

2. Vanguard High Dividend Yield ETF

Key Data Points

3. Vanguard Real Estate ETF

Key Data Points

4. iShares Core S&P Total U.S. Stock Market ETF

Key Data Points

5. Consumer Staples Select Sector SPDR Fund

Key Data Points

Key Data Points

7. Vanguard Utilities ETF

Key Data Points

8. iShares U.S. Healthcare Providers ETF

Key Data Points

9. Schwab U.S. TIPS ETF

Why are ETFs considered a safe investment?

Benefits of investing in safe index funds

Risks of investing in safe index funds

How do index funds affect your portfolio?

The bottom line

How to Invest in Index Funds: A Beginner's Guide

7 Best ETFs to Buy in October 2026

Recession-Proof Stocks: Industries That Thrive During Recessions

5 Best Oil ETFs for 2026 and How to Invest

Safest index funds FAQ

Are index funds 100% safe?

Are index funds 100% safe?