Billionaire investor Leon Cooperman is warning that the U.S. economy could slip into recession next year, potentially ending the market’s AI-fueled run, according to Business Insider.
His call comes as the Nasdaq 100 remains up about 19% this year and S&P 500 earnings are expected to surge more than 50% year over year this quarter.
If growth expectations deteriorate, investors could look toward defensive ETFs that offer exposure to less economically sensitive businesses, lower volatility or traditional safe havens.
• Vanguard Consumer Staples ETF shares are advancing steadily. What’s driving VDC shares up?
Consumer Staples
The Vanguard Consumer Staples ETF (NYSE:VDC) offers one of the clearest recession-defense plays. Consumer staples companies sell necessities such as food, beverages and household products, potentially making demand more resilient when consumers cut discretionary spending.
VDC is up 11.5% year to date, with a beta of 0.50, according to Benzinga data. For information, a beta of less than one indicates less low sensitivity to market volatility. The fund held 103 stocks and had around $9 billion in net assets.
That defensive positioning is already attracting attention: global consumer staples funds recorded more than $80 million in inflows alongside gold funds in the past 30 days, per ETFDb.
Utilities
The Vanguard Utilities ETF (NYSE:VPU) provides another defensive option. Utilities tend to benefit from relatively stable demand for electricity and other essential services, although their interest-rate sensitivity can become a headwind when Treasury yields rise. The beta on the fund is 0.59, which is fair.
For investors expecting slower growth but not necessarily a collapse, utilities offer a way to remain in equities while reducing exposure to economically sensitive sectors.
Low Volatility
For investors who want to stay broadly invested, the Invesco S&P 500 Low Volatility ETF (NYSE:SPLV) takes a different approach. It owns the 100 S&P 500 stocks with the lowest realized volatility over the previous 12 months.
SPLV carries a 0.54 beta and is rebalanced quarterly, allowing its portfolio to adapt as volatility changes.
Gold
Gold could become particularly important if Cooperman’s recession warning arrives alongside persistent inflation. SPDR Gold Shares (NYSE:GLD) has roughly $130 billion in assets and carries a beta of 0.17, which indicates very low susceptibility to market volatility.
Gold ETFs also attracted $2.8 billion of inflows in the past 30 days, suggesting investors are already seeking protection against macro uncertainty.
Recession Proof?
Nothing is truly "recession-proof."
But if expensive growth stocks stumble while consumers weaken and inflation remains sticky, defensive sectors, low-volatility equities and gold could offer investors more resilient places to hide.
Photo: A9 STUDIO on Shutterstock
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