If the stock market starts getting bearish, consider these ETFs to provide portfolio protection, risk mitigation, and even a positive performance.
The markets have turned more nervous in 2026. What started out as a rotation out of tech and into more defensive and value-oriented areas of the market has turned into a steeper sell-off of any sector that could be negatively disrupted by artificial intelligence (AI).
The S&P 500 and the Nasdaq-100 indexes haven’t experienced larger pullbacks yet, but it’s easy to see that happening if investor fear takes over. If that happens, investors might want to seek out areas of the market that could excel while U.S. stocks are correcting.
Here are three of the best Vanguard exchange-traded funds (ETFs) that could do particularly well if stocks head into a bear market or worse.
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1. Vanguard Extended Duration Treasury ETF
The Vanguard Extended Duration Treasury ETF (EDV 0.04%) would be a clear alternative to stocks in a bear market scenario, although it wouldn’t be considered a low-risk play.
Stocks and Treasury bonds are often inversely correlated, meaning bond prices go up when stocks go down. Long-term Treasuries, however, come with a lot of interest rate sensitivity and that can make them volatile.
Vanguard World Fund – Vanguard Extended Duration Treasury ETF
Today’s Change
(-0.04%) $-0.03
Current Price
$68.31
Key Data Points
Day’s Range
$68.06 – $68.34
52wk Range
$61.56 – $73.68
Volume
195K
But if interest rates go down in a bear market, which often happens because of the demand for the safety of Treasuries and the fact that the Fed usually cuts rates in such a scenario, the share price upside potential is significant.
2. Vanguard Consumer Staples ETF
The Vanguard Consumer Staples ETF (VDC 0.17%) invests in stocks, so it still has downside risk if stocks are plummeting. However, because of their defensive and durable nature, they usually fall less than the S&P 500 in corrections.
Vanguard World Fund – Vanguard Consumer Staples ETF
Today’s Change
(-0.17%) $-0.41
Current Price
$238.95
Key Data Points
Day’s Range
$237.76 – $239.98
52wk Range
$202.96 – $244.00
Volume
64K
In 2022, for example, the Vanguard S&P 500 ETF fell more than 18% for the full calendar year. But this ETF fell less than 2%. It was still a loss, but it would have provided investors a significant amount of downside protection.
3. Vanguard Total Bond Market ETF
The Vanguard Total Bond Market ETF (BND 0.03%) would be more of your standard equity portfolio risk hedge. It doesn’t target any specific subsectors of the bond market to try to maximize gains. It simply gives you the full investment-grade market, including corporates, Treasuries, and mortgage-backed securities (MBSes).
Vanguard Total Bond Market ETF
Today’s Change
(-0.03%) $-0.02
Current Price
$74.85
Key Data Points
Day’s Range
$74.78 – $74.86
52wk Range
$71.41 – $75.15
Volume
106K
As is the case with other bond funds, there is some interest rate sensitivity here, but it’ll be lower than that of the Extended Duration Treasury ETF. But as a tool to counteract the downside risk and volatility of equities in a bear market, this ETF is likely to offer protection, risk mitigation, and potentially some share price gains in the process.
