Key Points
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The global economic outlook is beginning to look shakier and equity markets have begun to decline.
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In these types of environments, risk management can protect your portfolio and get you through the tougher times.
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These four ETFs can act as a core portfolio holdings without exposing you to concentration risk.
Many investors focus on picking winners and losers in real time. In many cases, it’s more optimal to simply buy a portfolio of high-quality companies and let long-term compounding do its thing.
And you don’t need 20 different ETFs to do it either. There are a lot of funds out there that are diversified among hundreds, if not thousands, of stocks and come with razor-thin expense ratios. These ETFs often make for great core portfolio holdings that can be bought and held forever.
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Because of their diverse holdings, they’re built to withstand a wide range of market environments. Funds that target a specific sector or style can remain out of favor for years, even as the broader market rises. Dividend stocks are a good example. So is healthcare, or really pretty much any equity category that wasn’t tech over the past few years.
All-weather ETFs aren’t terribly exciting. But when conditions start to turn rough, as they are right now with the war in Iran, these funds demonstrate their value quickly. It doesn’t necessarily mean that they won’t lose money, but they’re likely to mitigate some of the volatility that can happen in those environments.
If you’ve got $2,000 (or even less) sitting in cash in your portfolio waiting to be put to work, take a look at four of my favorite all-weather ETFs. They’re great for long-term buy-and-hold, as a core foundational piece, or just to provide a little security in tough times.
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Vanguard Total Stock Market ETF
The Vanguard Total Stock Market ETF (NYSEMKT: VTI) is the best example of simply owning the market. For core portfolio positions, many investors will choose the Vanguard S&P 500 ETF. That’s certainly a defensible option, and it makes a lot of sense to own the biggest U.S. companies.
I prefer owning the total U.S. market, which means adding smaller companies to a large-cap portfolio. That diversification hasn’t mattered much over the past few years when mega-cap tech was almost single-handedly driving the major averages higher. But 2026 has been a good reminder that this doesn’t always happen. The Vanguard Total Stock Market ETF allocates about 25% of its assets to mid- and small-cap stocks. That’s enough to provide some overall risk mitigation while capturing additional long-term growth potential.
Invesco Nasdaq 100 ETF
The Invesco Nasdaq 100 ETF (NASDAQ: QQQM), along with its sister fund, the Invesco QQQ ETF, has been one of the market’s best-performing funds. The bull market in tech stocks and the artificial intelligence (AI) boom have played big roles in that. But the technological revolution feels like it’s still in the early innings.
There’s some risk to owning a fund that’s so heavily weighted in one sector, especially one designated as an all-weather portfolio. But there’s no denying that tech is one of the biggest drivers of the U.S. economy. Its ability to generate consistent revenue and earnings growth makes it a sector that can weather different economic environments.
Schwab U.S. Dividend Equity ETF
The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is a great all-weather portfolio because it’s full of durable, financially healthy companies that generate lots of cash flow, and the portfolio doesn’t look anything like the S&P 500.
The fund’s selection process targets companies that have paid dividends for years, have the balance sheet health to maintain those dividend payments, and pay above-average yields. Its top three sector holdings are energy (20%), consumer staples (19%), and healthcare (16%). These are areas of the market that should have steady demand regardless of the economic environment. That makes the Schwab U.S. Dividend Equity ETF a fund built to ride out the highs and lows.
Vanguard Total World Stock ETF
The Vanguard Total World Stock ETF (NYSEMKT: VT) is a great fund that adds international equity exposure to the total U.S. market. Since international economies can often look very different from the U.S., they offer a unique perspective and economic cycles that pair well with the S&P 500.
The Vanguard Total World Stock ETF is roughly 60% U.S. stocks, 30% developed-market stocks, and 10% emerging-market stocks. If that’s a little too much international exposure for your liking, you can use a combination of the Vanguard Total Stock Market ETF and the Vanguard Total International Stock ETF to tailor your own personal asset allocation.
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David Dierking has positions in Invesco NASDAQ 100 ETF, Vanguard Total International Stock ETF, and Vanguard Total Stock Market ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF, Vanguard Total International Stock ETF, and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.