Defensive stocks are companies that don't tend to depend heavily on what's going on in the wider economy for their growth (cf cyclical stocks). They are usually found in industries whose products are needed, come rain or shine, such as food retailers or water companies. Products such as tobacco or alcohol that are based on habit (or addiction) also tend to see fairly stable demand, and the companies that make them are seen as defensive as well.
A balanced portfolio should contain a mixture of cyclical and defensive stocks which can be altered as the economic climate changes.
See Tim Bennett's video tutorial: What are defensive stocks?
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Inflation holds steady at 3.8% ahead of BoE meetingThe rate of inflation did not rise in August, but the Bank of England is still expected to keep interest rates on hold tomorrow
-
Thousands of savers with £250k pensions take cash over tax-free money and IHT fearsWith a record £70 billion withdrawn from pensions in the year to March, experts are concerned savers are making knee-jerk decisions without advice that could affect their long term wealth
