Investment Suggestion: Purchasing Two Defensive ETFs Recommended for June 2025 by ChatGPT
As financial uncertainty mounts, investors are scrambling for defensive strategies to fortify their portfolios amidst the persisting fear of a potential recession. The ongoing trade tensions and volatile equity markets in the initial half of 2025 have further fueled these concerns.
To shed light on defensive investments, our website consulted OpenAI's ChatGPT—an artificial intelligence tool—for insights. Two exchange-traded funds (ETFs) were identified for their stability, income potential, and capacity to withstand market downturns.
One of these funds is the Utilities Select Sector SPDR Fund (XLU), which focuses on U.S. utility companies that provide essential services such as electricity, gas, and water. As of the most recent market close, XLU was trading at $81.67, marking an increase of over 7% year-to-date.
The appeal of XLU lies in its focus on the classic defensive sector of utilities. Being essential services, these companies continue to generate steady demand regardless of the economic climate. This predictable revenue flow supports reliable income streams for the companies in XLU's portfolio, many of which have a proven track record of increasing dividends.
During periods of economic strain or heightened volatility, investors often shift toward sectors like utilities for lower risk and consistent income. Historically, XLU has demonstrated resilience in downturns, making it an attractive choice for investors seeking stability and yield.
The second ETF recommended by ChatGPT is the iShares MSCI USA Min Vol Factor ETF (USMV). This fund employs an innovative beta approach, selecting U.S. stocks with lower historical volatility to help reduce overall portfolio risk. As of the current market, USMV trades at $93.35, reflecting a 4.5% increase year-to-date.
Designed to offer smoother returns and smaller drawdowns during turbulent market conditions, USMV is broadly diversified among U.S. large- and mid-cap stocks, with overweight positions in traditionally defensive sectors like healthcare, consumer staples, and utilities. This broad diversification makes USMV particularly relevant in the present environment, characterized by softening labor markets, weakening manufacturing data, and ongoing uncertainties surrounding Federal Reserve policy.
In times of stress, the ETF's disciplined approach to selecting low-volatility stocks can help alleviate the emotional stress associated with market swings, making it an appealing choice for risk-averse investors. The potential benefits of these defensive ETFs—XLU and USMV—include their stability, income potential, and resilience during market downturns, offering a balanced approach for investors navigating market volatility.
According to the Enrichment Data, additional defensive ETFs to consider are the Vanguard U.S. Quality Factor ETF (VFQY), Schwab U.S. Large-Cap ETF (SCHX), Invesco High Yield Equity Dividend Achievers ETF (PEY), iShares Core U.S. Aggregate Bond ETF (AGG), and SPDR Gold Shares ETF (GLD). These ETFs offer a mix of equity and fixed income strategies to help investors manage market turbulence while seeking stable returns and income potential. It's essential to align any investment choices with your objectives and risk tolerance.
Technology and artificial-intelligence played a significant role in identifying defensive investment strategies during the financial uncertainty of 2025. The utilization of an artificial intelligence tool, OpenAI's ChatGPT, led to the recommendation of two exchange-traded funds (ETFs): the Utilities Select Sector SPDR Fund (XLU) and the iShares MSCI USA Min Vol Factor ETF (USMV). Both XLU and USMV were highlighted for their stability, income potential, and ability to withstand market downturns, making them attractive choices for investors seeking defensive strategies amidst economic volatility.
