Defensive conservative investment style (2024)

FAQs

Why is defensive investing beneficial to your investment portfolio performance _____? ›

While diversification is a good first step in crafting a portfolio designed to weather sudden changes in the market, defensive investing takes things a step further by tilting allocations to more conservative areas and incorporating specific asset classes that have historically tended to better absorb volatility.

Typical investments in a defensive strategy include high-quality short-term bonds (such as Treasury notes) and blue-chip or defensive stocks.

A conservative, or defensive, investment style is a low-risk investment strategy. This style aims to achieve capital security, provide income, and protect the capital invested. To invest in this style, you will likely have a low tolerance for losses and risks and are investing for the short-term.

Defensive stocks provide stable, consistent earnings and dividends. They're less susceptible to factors that affect the rest of the stock market. They're much less risky but gains aren't likely to be as substantial, particularly during bull markets.

Growth investments are higher risk and offer a higher potential return compared to defensive investments. They aim to give capital growth and some provide income (for example, dividends for shares or rent for property).

Defensive strategy is defined as a marketing tool that helps companies to retain valuable customers that can be taken away by competitors. When rivalry exists, each company must protect its brand, growth expectations, and profitability to maintain a competitive advantage and adequate reputation among other brands.

the means used by companies in market leadership positions to defend their market share from attacks by challengers; six common defence strategies are position defence, flanking defence, pre-emptive defence, counter-offensive defence, mobile defence and contraction defence.

An offensive strategy, or “aggressive strategy,” focuses on maximizing returns by taking a higher degree of risk. A defensive strategy helps investors minimize losses and preserve capital (versus growing their capital).

Defensive investing is a strategy where you take as little risk as possible and choose stable investment products that have proven themselves over the years. Typically, these include stocks of established companies that pay a fixed dividend each year and show little volatility.

What is the benefit of investment portfolio? ›

An investment portfolio can help you achieve your long-term financial dreams. For example, build a nest egg for your retirement, repay your mortgage early, or pay university fees for your children. While savings accounts offer easy access and the security of guaranteed capital, the returns can be small.

A diversified portfolio reduces risk without compromising investment returns. However, it does not completely protect an investor against investment losses during times of market turmoil.

As the name suggests, a defensive portfolio is for investors who prefer to safeguard their returns. The risks are minimal with this portfolio type. The returns might not be significant in some cases, but they are sure to come. For instance, an investor with a defensive approach might invest in blue-chip stocks.