What are defensive stocks?

Defensive stocks are those that tend to provide stable earnings and consistent returns, even during an economic downturn. Shares of well-established companies in the consumer staples, utilities, and healthcare sectors are common examples of defensive stocks.

Do defensive stocks hurt your portfolio?

Underperformance in periods of economic growth: In a strong economy when other stocks are soaring, defensives are more likely to stay where they've always been in terms of growth. This means that holding too many defensive stocks can hurt your portfolio when the market is doing well.

Are defensive stocks a good hedge against a slide in returns?

Although the return on investment may be low during a bullish market for defensive stocks, they provide a necessary hedge against a slide in returns in bearish markets as the demand for companies’ stocks providing defensive goods and services remains relatively stable in any given market condition.

Are'recession-proof' stocks still defensive?

These are the traditional defensive sectors. But it's possible for a company that's not necessarily in a "recession-proof" industry to still have stock that's considered defensive because of the company's size, history, and proven ability to adapt to changes in the market.