2023-04-16 09:09:00 ET
The Federal Reserve rapidly tightened its monetary policy over the past year, simultaneously shrinking its balance sheet and raising interest rates in an effort to squash inflation. In fact, the central bank raised its benchmark rate at its most aggressive pace since the early 1980s. The good news is inflation is indeed trending downward, but the bad news is Fed officials now expect the economy to slip into a mild recession later this year.
Unfortunately, no equity investment is ever completely safe, least of all during an economic downturn, and no business is completely recession-proof. But the Vanguard Value ETF (NYSEMKT: VTV) is a good place for risk-averse investors to put their money right now. The index fund has fallen less sharply than the S&P 500 during the current bear market, and it has been less volatile over the past decade.
The business cycle is generally broken into four phases: early cycle, mid cycle, late cycle, and recession. The economy expands aggressively during the first two phases, economic growth moderates in the third phase, and the economy contracts during the fourth phase. According to Fidelity, consumer staples, energy, healthcare, and utilities stocks tend to perform the best during late cycles and recessions.
For further details see:
1 Ideal Index Fund Investors Can Buy With Confidence in a Recession