3 Top ETFs To Profit As Investors Move Away From Big Tech in 2026

Defensive stocks are defined as the stocks in companies that are grouped in sectors supplying goods and services in constant demand as essentials, and thus, do not follow trends of popularity. Defensive stocks are companies in such sectors as:

• Healthcare (ex: United Health)
• Consumer staples (ex: Procter & Gamble)
• Utilities (ex: Con Edison)
• Energy (ex: Chevron)

While the Magnificent 7 tech-stock-led S&P 500 sailed into the home stretch close of 2025 up +17%, an underlying trend that had started a few months earlier was identified by Goldman Sachs, Morgan Stanley, and others that raised more than a few eyebrows: investors were selling tech stocks to buy defensive stocks. 

The myriad of reasons for this rotational shift in asset allocation from hedge funds and other large institutional investors reflected a range of sentiments and concerns over valuations, supply chains, and a host of other areas. Given that the trend has yet to abate, 2026 might be a significant one for defensive stocks to at least regain their traditional weighting of global investment funds away from the overbuying of riskier, high-flying tech stocks. 

Therefore, a few defensive stock ETFs in the healthcare, consumer staples, and utilities sectors might bear close watching as January’s first trading week was underway:

• State Street Healthcare Select Sector SPDR ETF (NYSE: XLV)
• Fidelity MSCI Consumer Staples Index ETF (NYSE: FSTA)
• Vanguard Utilities Index Fund ETF (NYSE: VPU)

Selling and Shorting Tech Stocks

The rotation trend began picking up speed in November, 2025. Bank of America reported that hedge funds, other institutions and large retail investors were unloading tech stocks, with some stock sales surpassing $5 billion in one week. 

In Goldman Sachs’ analysis, hedge funds were selling tech stocks and specifically shifting funds into healthcare, in addition to a selloff of consumer discretionary (i.e. hotels and restaurants) into consumer staples. 

S&P Global reported that November saw short interest in North American technology market cap take a sizeable leap roughly  from September :

• Semiconductor short interest went from 0.1% to 0.3%;
• Hardware and Equipment short interest rose from 0.5% to 0.62% before backing off to 0.55%;
• Software climbed from 0.6% starting in late August to 0.89%, before falling back to 0.85%.

The selloff was not uniformly felt by the entire tech sector, and not even by all of the Magnificent 7 stocks. Growing doubts about overvaluation of AI from Michael “The Big Short” Burry and others were felt by companies like AMD, Oracle, and Super Micro Computer. Of the Magnificent 7, Nvidia took the biggest hit (-7.0%), while Google and Apple only suffered one-tenth of Nvidia’s bloodletting, while Amazon even posted a minor gain.

A Reuters report also cited:

• Growing concerns over the overvaluation of AI and tech stocks in general, leading to hedge fund profit taking. 
• In light of healthcare’s M&A activity, strong earnings and reduced regulations, thanks to HHS Secretary Robert Kennedy, the flight to healthcare stocks made total sense.
• Concurrent shifting from consumer discretionary to consumer staples indicated an unease and perception of US economic weakness (at least in blue states where local policies had maintained higher retail prices) and the need to stock up on food and personal care products due to concerns over “affordability”.
• Regardless of AI company turbulent price activity, the many data centers launched to run AI will still need the massive electricity required for AI operation. With fuel prices continuing to fall thanks to the Trump administration’s focus on energy independence, utilities were getting a boost.

State Street Healthcare Select Sector SPDR ETF

Launched on December 16, 1998,  XLV tracks the S&P Healthcare Select Sector Index. It has a 5-star Morningstar rating. Healthcare breakthroughs on new treatments and cuts in red tape regulation are helping to boost the sector higher.

NAV	$158.05	Yield	1.60%
Net Assets	$40.77 billion	# holdings	60
Expense Ratio	0.08%	1-Year Return	15.71%
Average Volume	12.2 million shares	3-YearReturn	6.98%
52-week range	$127.35-$160.59	5-Year Return	8.11%
Beta	0.59	10-Year Return	9.76%

The top 10 holdings of XLV are:

• Eli Lilly: 14.73%
• Johnson & Johnson: 8.60%
• Abbvie: 6.90%
• United Health Group: 5.51%
• Merck: 4.71%
• Thermo Fisher Scientific : 4.07%
• Abbott Labs: 3.87%
• Intuitive Surgical: 3.66%
• Amgen: 3.10%
• Gilead Sciences: 2.62%

Fidelity MSCI Consumer Staples Index ETF

Designed to track the MSCI USA IMI Consumer Staples 25/50 Index, FSTA carries a 4-star Morningstar rating. The “affordability” issue has helped to bolster the return of consumer staples, which had shown weakness in past years of the tech bull run. 

NAV	$49.13	Yield	2.34%
Net Assets	$1.32 billion	# holdings	97
Expense Ratio	0.08%	1-Year Return	1.91%
Average Volume	138,277 shares	3-YearReturn	5.70%
52-week range	$47.45 – $52.96	5-Year Return	6.39%
Beta	0.55	10-Year Return	7.68%

Top 10 FSTA holdings are:

• WalMart: 15.41%
• Costco: 11.97%
• Procter & Gamble: 9.76%
• Coca-Cola: 8.07%
• Philip Morris: 4.50%
• Pepsico: 4.34%
• Altria: 3.26%
• Mondelez Int’l: 2.43%
• Monster Beverage: 2.02%

Vanguard Utilities Index Fund ETF

Sporting a 3-star Bronze rating from Morningstar, VPU tracks the MSCI US Investable Market Index (IMI)/Utilities 25/50. In addition to the proliferation of AI data centers’ massive electric requirements, cap-ex growth in utilities for 2026 is expected to reach $227.80 billion. 

NAV	$186.39	Yield	2.73%
Net Assets	$9.91 billion	# holdings	72
Expense Ratio	0.09%	1-Year Return	16.39%
Average Volume	192,780 shares	3-YearReturn	9.85%
52-week range	$154.00-$203.15	5-Year Return	9.48%
Beta	0.68	10-Year Return	10.40%

Top 10 holdings of PVU are:

• NextEra Energy: 11.45%
• Constellation Energy: 7.34%
• Duke Energy: 6.21%
• Southern Co.: 6.21%
• American Electric Power: 4.27%
• Sempra: 3.98%
• Vistra Corp: 3.91%
• Dominion Energy: 3.45%
• Xcel Energy: 3.13%
• Exelon: 3.07%