Defensive stocks are stocks that tend to provide the best relative performance during periods of extreme volatility or during adverse trends. Defensive stocks are chosen because of the stability they provide to a portfolio.
Normally, defensive stocks come from sectors that have a constant demand and have a low beta vis-à-vis the market. Examples of defensive stock sectors are food and health care. Defensive stocks are opposite to cyclical stocks, as they are not directly tied to the economic cycle.
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