3 Ultra-Safe Vanguard ETFs to Buy, Even if There's a Stock Market Sell-Off in 2026
- - 3 Ultra-Safe Vanguard ETFs to Buy, Even if There's a Stock Market Sell-Off in 2026
Daniel Foelber, The Motley FoolDecember 18, 2025 at 5:35 AM
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Key Points -
The Total Stock Market ETF is more diversified than an S&P 500 index fund.
Large-cap value stocks tend to hold up well during stock market sell-offs.
The consumer staples sector contains many high-yielding stocks at reasonable valuations.
10 stocks we like better than Vanguard Total Stock Market ETF ›
If the calendar year ended at the time of this writing, the S&P 500 would be up over 15% in 2025 -- a strong encore to over 20% gains in 2024 and 2023. Whereas historically, the S&P 500 has produced an average annual total return of 9% to 10%.
However, there are valid reasons why the S&P 500 is rising so rapidly. Nvidia and 19 other stocks make up around half of the index. Many of these companies have demonstrated solid earnings growth and high margins.
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Investors looking to diversify their portfolios with exchange-traded funds (ETFs) have come to the right place. Investment management firm Vanguard offers some of the lowest-cost ETFs available. It can charge low fees because it manages a massive amount of assets.
Here's why the Vanguard Total Stock Market ETF (NYSEMKT: VTI), the Vanguard Value ETF (NYSEMKT: VTV), and the Vanguard Consumer Staples ETF (NYSEMKT: VDC) are good buys even if the stock market falls in 2026.
A lightbulb with the year “2026” inside next to stacks of coins with an upward-sloping stock market line chart.
Image source: Getty Images.
1. Vanguard Total Stock Market ETF
The Total Stock Market fund is the largest ETF or index fund in the world -- surpassing $2 trillion in net assets earlier this year. As the largest companies have grown larger, the S&P 500 has expanded to comprise a greater share of the total U.S. stock market. But it's not the entire market.
The Total Stock Market ETF fund comprises thousands of companies not included in the S&P 500. Combined, these non-S&P 500 companies make up around 16% of the stock market. That's the key difference between the Total Stock Market fund and an S&P 500 index fund.
Over the long run, the Total Stock Market ETF will perform similarly to the S&P 500. But the Total Stock Market ETF could be a better buy for investors who want to fully participate in the market.
It's also a better choice for investors concerned about a stock market sell-off, as many smaller companies have inexpensive valuations compared to high-flying top tech names. There's a psychological component to owning the Total Stock Market ETF as well. If you believe that the U.S. stock market will go up in value over time, then it can be easier to hold an ETF like the Total Stock Market fund through periods of volatility than individual stocks, where you can talk yourself into a bad reason to sell them.
2. Vanguard Value ETF
The Vanguard Value ETF is a great investment option for investors looking to participate in the stock market with reduced exposure to tech-focused companies compared to the S&P 500. You won't find any "Magnificent Seven" names in this ETF.
The largest holdings are JPMorgan Chase, Berkshire Hathaway, ExxonMobil, Johnson & Johnson, and Walmart. The financials, industrials, and healthcare sectors dominate this ETF, with many companies offering attractive valuations and growing dividends.
Value stocks tend to hold up better during a market sell-off because they are priced based on their existing earnings rather than potential earnings.
The Value ETF yields 2.1% and has a 21.2 price-to-earnings (P/E) ratio compared to a 1.1% yield and 29.1 P/E for the Vanguard S&P 500 ETF -- making it a good choice for risk-averse investors looking to boost their passive income stream.
3. Vanguard Consumer Staples ETF
The consumer staples sector has been among the worst-performing sectors in 2025 as investors gravitate toward growth stocks and business-to-business companies.
Consumers are pulling back on spending, and inflation has made it challenging for consumer staples companies to pass along higher costs to strained consumers. Many leading consumer staples companies are experiencing weak volume and margin pressure.
The Vanguard Consumer Staples ETF is an excellent choice for value-focused investors looking to boost their passive income. The ETF yields 2.2% and features a 23.6 P/E ratio. Walmart, Costco Wholesale, Procter & Gamble, Coca-Cola, and PepsiCo make up 51.8% of the fund. These reliable companies should do well during a recession thanks to their elite supply chains and pricing power.
Even with consumers looking to stretch their dollars, the sector should hold up well during a stock market sell-off, especially if it has nothing to do with consumer staples -- like a downturn in artificial intelligence spending. For example, consider that during the worst of the tariff-induced sell-off on April 8, the S&P 500 was down by just over 15% year to date, while the Vanguard Consumer Staples ETF was down by just 3.1%.
Using ETFs in a diversified portfolio
In today's age of low-cost ETFs, it's easy to use ETFs as tools in your portfolio. If you like investing in individual stocks in sectors where you feel you have a comprehensive understanding, then ETFs can be used as role players to fill a need outside of your wheelhouse. For example, if your portfolio is heavily concentrated in AI growth stocks, but you want to allocate some capital to dividend-paying stocks, a simple way to do that would be to buy the Vanguard Value ETF or the Vanguard Consumer Staples ETF. Or if you're looking for a catch-all way to invest in the broader market without having to pay attention to individual stocks, then the Vanguard Total Stock Market ETF could be for you.
The best way to navigate potential market volatility isn't to hit the sell button, run for the exits, and wait for prices to fall before jumping back in. Rather, a better approach is to align your holdings with your risk tolerance, hold stocks during periods of volatility, and compound returns over time.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber has positions in Nvidia and Procter & Gamble and has the following options: short December 2025 $155 calls on Procter & Gamble. The Motley Fool has positions in and recommends Berkshire Hathaway, Costco Wholesale, JPMorgan Chase, Nvidia, Vanguard Index Funds - Vanguard Value ETF, Vanguard S&P 500 ETF, Vanguard Total Stock Market ETF, and Walmart. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Source: “AOL Money”
