Recession Proof

Conservative Macro Theme

Utilities, healthcare, and consumer staples — the sectors people can't stop buying from even in a downturn. Paired with long bonds that rally when the economy weakens.

5
ETFs
2.3%
Aggregate Yield
$12.2B
Wtd Avg AUM

Holdings

Symbol Name Weight Price 1D 3M YTD Yield AUM
IDU iShares U.S. Utilities ETF 20% $118.54 ... ... ... 2.1% $1.7B
IYH iShares U.S. Healthcare ETF 20% $61.77 ... ... ... 1.3% $2.9B
FSTA Fidelity MSCI Consumer Staples Index ETF 20% $52.77 ... ... ... 2.2% $1.4B
TLT iShares 20+ Year Treasury Bond ETF 25% $86.50 ... ... ... 3.8% $42.2B
AAAU Goldman Sachs Physical Gold ETF Shares 15% $46.94 ... ... ... — $2.9B

Investment Thesis

When the economy contracts, consumer discretionary spending gets cut but people still pay their electric bills, buy medicine, and eat groceries. These three defensive sectors — utilities, healthcare, and consumer staples — have historically outperformed during recessions because their revenue streams are relatively immune to economic cycles. Long-term treasuries are the best-performing asset class during recessions because the Fed typically cuts rates aggressively, driving bond prices higher. In 2008, TLT returned +33% while the S&P 500 fell -37%. Gold adds a safe-haven component that performs well during financial uncertainty. This portfolio sacrifices upside during booms for downside protection during busts.

Portfolio Construction

IDU iShares U.S. Utilities ETF
20%
Utilities — stable cash flows, regulated revenues. Electric, water, and gas utilities earn regulated returns regardless of economic conditions. They also pay high dividends from their predictable cash flows.
Yield: 2.1% AUM: $1.7B
IYH iShares U.S. Healthcare ETF
20%
Healthcare — non-discretionary spending. People don't stop taking medicine or visiting hospitals during recessions. Pharma, health insurance, and medical devices provide defensive earnings growth.
Yield: 1.3% AUM: $2.9B
FSTA Fidelity MSCI Consumer Staples Index ETF
20%
Consumer staples — toothpaste and groceries. Procter & Gamble, Coca-Cola, Walmart, and Costco sell products with inelastic demand. These stocks have the lowest betas in the equity market.
Yield: 2.2% AUM: $1.4B
TLT iShares 20+ Year Treasury Bond ETF
25%
Long treasuries rally in recession — when the Fed cuts rates, long-duration bonds surge. TLT has 15+ year effective duration, making it the most powerful recession hedge in the portfolio.
Yield: 3.8% AUM: $42.2B
AAAU Goldman Sachs Physical Gold ETF Shares
15%
Safe haven in uncertainty — gold tends to rally during financial stress as investors flee to hard assets. It also benefits from the rate cuts that accompany recessions.
AUM: $2.9B

Key Considerations

  • Defensive sectors significantly underperform during economic recoveries and bull markets
  • Long-duration bonds are extremely sensitive to rate changes — if rates rise, TLT can fall 20%+
  • Low growth potential means this portfolio may not keep pace with inflation over very long periods
  • Best used as a tactical allocation when recession risk is elevated, not as a permanent portfolio
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