Defensive stocks are currently outperforming the broader market as investors seek shelter from the ongoing bear market. These stocks, typically found in sectors such as consumer staples, healthcare, and utilities, are characterized by their consistent demand regardless of the economic climate.

Why Defensive Stocks Are Favored

Several factors contribute to the appeal of defensive stocks during periods of market downturn:

• Stable Earnings: Companies in these sectors tend to have predictable revenue streams, making their earnings less volatile.
• Dividend Payouts: Many defensive stocks offer attractive dividend yields, providing a steady income stream for investors.
• Lower Beta: These stocks generally have a lower beta, indicating less sensitivity to overall market movements.

Examples of Defensive Sectors

Here are some examples of sectors considered defensive:

• Consumer Staples: Companies that produce essential goods like food, beverages, and household products.
• Healthcare: Businesses providing medical services, pharmaceuticals, and medical devices.
• Utilities: Companies that supply essential services such as electricity, gas, and water.

While defensive stocks may not offer the same growth potential as more cyclical sectors during bull markets, their ability to preserve capital and provide consistent income makes them a valuable component of a well-diversified portfolio, particularly in times of economic uncertainty.