3 ETFs to Beat Back the Bears

I know it seems silly to talk about bear-market protection when the market is sitting near all-time highs. But do you buy insurance after a crash? Do you check out helmets after you wreck your bike? No.

That's not to say you should go out and buy any bear-market ETFs right now. But you should do your research so that at whatever point you think a storm's a-brewin', you're not panicking—you're calmly grabbing your market umbrella.

Which bear-market ETFs make the grade? Read on, and I'll introduce you to some of the best bear-market ETFs to buy. These funds represent a number of ways to shield against—or even attack!—a bear market.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

The Best Bear Market ETFs to Buy

Each bear market has its own causes and characteristics, so naturally, which investments will protect you the most will vary from one bear market to the next. 

Plus, your goals might vary. You might simply want to limit your risk but still be able to participate in most of the upside in case you incorrectly anticipate a bear market. Or you might be more aggressive and want to actually produce positive returns if stocks circle the drain.

For that reason, it's good to have options—rather than having one go-to fund for a rainy day, it might behoove you to have a handy list of several bear-market ETFs to meet your needs.

Here are three selections from my list of the best bear market ETFs.

Invesco S&P 500 Low Volatility ETF

• Style: U.S. low-volatility large-cap stock
• Assets under management: $7.1 billion
• Dividend yield: 2.1%
• Expense ratio: 0.25%, or $2.50 per year on every $1,000 invested

High volatility and market losses are frequently mentioned the same breath. That's because volatility, put very simply, is how much an asset moves up and down—so higher volatility typically includes a higher risk that prices will go down.

Logically, then, investors looking to survive a bear market will often seek out low-volatility investments. Reduced swings during a time in which most stocks are heading lower should theoretically limit downside during a down market.

The Invesco S&P 500 Low Volatility ETF (SPLV) is the biggest low-volatility stock ETF on the market. This straightforward ETF tracks the S&P 500 Low Volatility Index, which starts with the S&P 500's components, narrows it down to the hundred components with the lowest realized volatility over the past 12 months, then "weights" each stock based on its lack of volatility. (Weighting refers to the percentage of fund assets invested in something, be it an asset, industry, sector, country, etc.)

Related: The 13 Best Mutual Funds You Can Buy Right Now

Right now, the resultant 104-stock portfolio is extremely loaded up on utilities (25%) thanks to their more recent outperformance. It also includes double-digit allocations to to financials (22%), real estate (18%), and industrials (10%). But the portfolio is pretty balanced among individual holdings, with no one stock carrying more than a 1.4% weight. Top holdings are filled with utilities such as FirstEnergy (FE) and Pinnacle West (PNW), but the fund also holds traditional blue-chip names such as Johnson & Johnson (JNJ) and Coca-Cola (KO).

Volatility can be measured by several metrics, but a commonly used one is "beta." Beta measures a security's volatility compared to a benchmark—and with stocks, that benchmark is typically the S&P 500. The benchmark will always have a beta of 1. SPLV has a three-year beta of 0.37, implying that over the past three years, the ETF has been roughly a third as volatile than the broader stock market.

A low beta (or any measure of low volatility) isn't a guarantee that an asset will outperform during a bear market. For instance, SPLV actually underperformed the S&P 500 by 2 percentage points during 2020's COVID bear market.

Fortunately, quick crashes tend to be the exception. Invesco's low-volatility ETF has performed very well during longer periods of market sluggishness. For instance ...

• Between June 2015 and May 2016, the SPLV delivered a 9% total return (price plus dividends) while the turbulent S&P 500 was marginally negative.
• During the 2022 bear market, SPLV only lost 15% compared to 24% for the S&P 500.
• It fared well during 2025's near-bear downturn, off just 6% between Feb. 19 and the market low on April 8, versus a 19% loss for the S&P 500.
• It also outperformed the S&P 500 during March 2026's downturn, but by a thinner margin (-6% to the index's -8%).

Low volatility is a double-edged sword—if stocks are generally heading higher, owning a fund that doesn't swing as dramatically means you'll probably leave some gains on the table. Still, SPLV gives you the ability to protect against some downside while still participating in some of the upside of a bull market. That makes it one of the best bear-market ETFs for investors who just want to exercise a little caution.

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Franklin International Low Volatility High Dividend ETF

• Style: International low-volatility dividend stock
• Assets under management: $5.2 billion
• Dividend yield: 3.9%
• Expense ratio: 0.40%, or $4.00 per year on every $1,000 invested

The Franklin International Low Volatility High Dividend ETF (LVHI) helps us cover our bases on a couple of fronts: It helps us target lower volatility in the international portion of your portfolio, and it demonstrates how dividends can be helpful in providing stability.

Here's how LVHI builds its 194-stock portfolio:

The fund starts by reviewing the MSCI World ex-US IMI Index, which is made up of more than 3,000 stocks of all sizes across numerous countries. It uses a proprietary screen to identify "profitable companies that have the potential to pay relatively high sustainable dividend yields." It then scores those dividend stocks based on price and earnings volatility; higher-scoring stocks get larger weightings.

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But there are constraints. Every quarter, the fund rebalances so that no stock accounts for more than 2.5% of assets, no sector accounts for more than 25% (except real estate investment trusts [REITs], which can't exceed 15%), no country accounts for more than 15% of assets, and no individual geographic region exceeds 50%.

For instance, right now, the U.K. and Canada are the greatest country weights at 15% apiece, followed by Japan (14%), France (10%), and Switzerland (8%). Financials are the largest sector allocation at 25%—common among international funds of all stripes—then energy (14%), then industrials (12%). Top holdings currently include British multinational energy giant Shell (SHEL), Canada's Bank of Nova Scotia (BNS), and Australian miner BHP Group (BHP).

A reliance on international large caps results in a fine yield of nearly 4% that's almost four times what the S&P 500 offers. Those dividends represent returns that are largely separated from price—even if the stocks themselves don't perform well, those dividends can help make up for at least some of that shortfall.

Franklin's low-vol international fund isn't terribly old, having hit the market in 2016. But it has performed very well so far, besting virtually all of its large-cap foreign-stock peers over the past five years. That includes a positive return in 2022 when competitors in its category were down 9% on average, roughly half the losses of the S&P 500 during 2025's downturn, and roughly 3% declines in March 2026.

Related: The 10 Best Dividend ETFs [Get Income + Diversify]

ProShares Short S&P500 ETF

• Style: Inverse stock
• Assets under management: $838.4 million
• Dividend yield: 4.2%
• Expense ratio: 0.89%, or $8.90 per year on every $1,000 invested

All of the aforementioned funds dance around bear markets.

The ProShares Short S&P500 ETF (SH) uses them to its advantage.

The view from 10,000 feet is that when the S&P 500 goes down, SH goes up. How it does that is fairly complex—rather than simply holding stocks, bonds, or physical assets like the aforementioned ETFs, this fund needs to use a series of futures, swaps, and Treasury bills to create the inverse performance of the S&P 500. I normally say that investors should "look under the hood" before they buy an ETF, but in this case, knowing what the ProShares Short S&P500 ETF holds isn't helpful in understanding the fund.

What is helpful is understanding how SH behaves.

Related: 10 Best Index Funds You Can Buy Now

SH provides the inverse daily return of the S&P 500. This means if the S&P 500 declines by 1% on Monday, this ETF will gain 1% on Monday (minus expenses, of course). But because this only occurs on a daily basis, that doesn't mean if the S&P 500 declines by 10% in a year, SH will gain 10% in a year. That's in large part because of how returns compound over time, which is easiest to demonstrate with a table.

This example doesn't even account for fees, which are much higher in SH than they are for your average S&P 500 index fund. Not to mention, if the market goes up, you're not participating in any upside whatsoever—SH will lose money. That's not an argument against SH. Far from it. I'm simply explaining the risks, which are important to know before you dive into any fund.

But this ETF can do quite well for itself. From Feb. 19 through April 8 of 2025, SH generated a positive 23% total return. It gained 9% during 2026's market decline.

In fact, SH not only has a permanent place in my annual best ETFs roundup, but I've owned it before, and I actually owned it for a large part of 2025's downturn (though I have since sold off my position).

While this ProShares ETF might not provide perfect negative-1-for-1 performance, it comes pretty darn close—certainly close enough to make it useful if you're anticipating a significant downturn. It's also a safer hedge than leveraged funds that provide -2x or even -3x the market's performance, which can get out of hand in a hurry. And it's a better alternative than jettisoning stocks you already own, which can not only result in taxable events if done outside of tax-advantaged retirement plans, but (in the event you're selling dividend stocks you've owned for a while) can snuff out attractive yields on cost.

One last important note: SH isn't meant to be held forever. Funds like this are tactical in nature—you hold it for as long as you find it useful, but once you think the tide is going to turn, get out. Leaving it in your portfolio in perpetuity will provide an unnecessary drag as long as stocks go up in the long term.

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