Recession Proof

Conservative Macro Theme

Utilities, healthcare, and consumer staples — the sectors people can't stop buying from even in a downturn. Paired with long bonds that rally when the economy weakens.

ETFs

2.3%

Aggregate Yield

$14.2B

Wtd Avg AUM

Holdings

Symbol	Name	Weight	Price	1D	3M	YTD	Yield	AUM
IDU	iShares U.S. Utilities ETF	20%	$108.03	...	...	...	2.4%	$1.5B
IYH	iShares U.S. Healthcare ETF	20%	$74.19	...	...	...	1.1%	$4.2B
FSTA	Fidelity MSCI Consumer Staples Index ETF	20%	$55.38	...	...	...	2.1%	$1.5B
TLT	iShares 20+ Year Treasury Bond ETF	25%	$80.03	...	...	...	4.1%	$49.7B
AAAU	Goldman Sachs Physical Gold ETF Shares	15%	$41.08	...	...	...	—	$2.5B

Investment Thesis

When the economy contracts, consumer discretionary spending gets cut but people still pay their electric bills, buy medicine, and eat groceries. These three defensive sectors — utilities, healthcare, and consumer staples — have historically outperformed during recessions because their revenue streams are relatively immune to economic cycles. Long-term treasuries are the best-performing asset class during recessions because the Fed typically cuts rates aggressively, driving bond prices higher. In 2008, TLT returned +33% while the S&P 500 fell -37%. Gold adds a safe-haven component that performs well during financial uncertainty. This portfolio sacrifices upside during booms for downside protection during busts.

Portfolio Construction

IDU iShares U.S. Utilities ETF

20%

Utilities — stable cash flows, regulated revenues. Electric, water, and gas utilities earn regulated returns regardless of economic conditions. They also pay high dividends from their predictable cash flows.

Yield: 2.4% AUM: $1.5B

IYH iShares U.S. Healthcare ETF

20%

Healthcare — non-discretionary spending. People don't stop taking medicine or visiting hospitals during recessions. Pharma, health insurance, and medical devices provide defensive earnings growth.

Yield: 1.1% AUM: $4.2B

FSTA Fidelity MSCI Consumer Staples Index ETF

20%

Consumer staples — toothpaste and groceries. Procter & Gamble, Coca-Cola, Walmart, and Costco sell products with inelastic demand. These stocks have the lowest betas in the equity market.

Yield: 2.1% AUM: $1.5B

TLT iShares 20+ Year Treasury Bond ETF

25%

Long treasuries rally in recession — when the Fed cuts rates, long-duration bonds surge. TLT has 15+ year effective duration, making it the most powerful recession hedge in the portfolio.

Yield: 4.1% AUM: $49.7B

AAAU Goldman Sachs Physical Gold ETF Shares

15%

Safe haven in uncertainty — gold tends to rally during financial stress as investors flee to hard assets. It also benefits from the rate cuts that accompany recessions.

AUM: $2.5B

Key Considerations

Defensive sectors significantly underperform during economic recoveries and bull markets
Long-duration bonds are extremely sensitive to rate changes — if rates rise, TLT can fall 20%+
Low growth potential means this portfolio may not keep pace with inflation over very long periods
Best used as a tactical allocation when recession risk is elevated, not as a permanent portfolio

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