What investors typically own when conditions favour risk and when they do not, what each step of the exposure ladder lost in the 2020 crash and the 2022 bear market, and which “safe” assets actually protected.
A risk‑on portfolio is built to capture growth when conditions reward risk; a risk‑off portfolio is built to lose less when they do not. The terms come from how markets behave as a group: in risk‑on, risk‑off phases, stocks, credit and commodities tend to rise or fall together, and money moves toward or away from safety.
The same investor usually holds both kinds of assets. What changes is the mix. This is one part of portfolio protection: deciding in advance what you hold in each kind of market.
| Risk‑on portfolio | Risk‑off portfolio | |
|---|---|---|
| Share in stocks | Full, sometimes above 100% with leverage | Reduced, sometimes to a small core |
| Kind of stocks | High‑beta, growth, small caps, cyclicals | Low‑volatility, defensive sectors, large caps |
| Leverage | A 2× slice for some investors | None |
| Safe assets | Little cash | T‑bills, money market funds, short Treasuries |
| Goal | Capture the upside | Keep the loss small enough to stay in the plan |
Data through the close of Oct 20, 2026. The S&P 500 fell 1.2% over the last five trading days, and the Nasdaq‑100 fell 3.5%. The S&P 500 is 1.3% below its record close of Oct 6: a small dip from its record. It is 6.4% above its 200‑day average (+7.9% a week earlier). Its 20‑day volatility is 9.4% a year, calmer than 71% of trading days since 2016.
Daily closes over the last year, through Oct 20, 2026. Green: the index above its average; red: below it.
Through Oct 20, 2026. “vs 200‑day avg.” = how far the close sits above or below its 200‑day average.
| Index fund | Last 5 days | Year to date | From its high | vs 200‑day avg. |
|---|---|---|---|---|
| S&P 500 (SPY) | −1.2% | +13.1% | −1.3% | +6.4% |
| Nasdaq‑100 (QQQ) | −3.5% | +17.0% | −5.5% | +6.8% |
| Russell 2000 (IWM) | −0.3% | +12.2% | −9.6% | −0.3% |
| Index fund | S&P 500 (SPY) | Nasdaq‑100 (QQQ) | Russell 2000 (IWM) |
|---|---|---|---|
| Last 5 days | −1.2% | −3.5% | −0.3% |
| Year to date | +13.1% | +17.0% | +12.2% |
| From its high | −1.3% | −5.5% | −9.6% |
| vs 200‑day avg. | +6.4% | +6.8% | −0.3% |
Year‑to‑date return through Oct 20, 2026: what each fund returned next to its multiple times the index’s return. The gap is the daily reset at work.
| Fund | Last 5 days | Year to date | Multiple × index | From its high |
|---|---|---|---|---|
| 2× S&P 500 (SSO) | −2.4% | +21.6% | +26.2% | −3.1% |
| 3× S&P 500 (UPRO) | −3.7% | +29.5% | +39.3% | −5.1% |
| 2× Nasdaq‑100 (QLD) | −7.2% | +27.2% | +33.9% | −11.1% |
| 3× Nasdaq‑100 (TQQQ) | −10.7% | +33.8% | +50.9% | −19.3% |
| 3× Russell 2000 (TNA) | −1.6% | +22.5% | +36.7% | −48.2% |
| 3× chip stocks (SOXL) | −23.5% | +132.1% | +198.4% | −67.6% |
Returns through Oct 20, 2026, dividends and interest included.
| Asset | Last 5 days | 1 month | Year to date | 1 year |
|---|---|---|---|---|
| T‑bills, 1–3 months (BIL) | +0.1% | +0.1% | +1.4% | +2.3% |
| Treasuries, 1–3 years (SHY) | +0.1% | 0.0% | −0.7% | +0.3% |
| Treasuries, 7–10 years (IEF) | +0.8% | −0.7% | −4.9% | −4.3% |
| Treasuries, 20+ years (TLT) | +2.2% | −1.0% | −6.7% | −7.9% |
| US bond market (AGG) | +0.6% | −0.6% | −3.3% | −2.6% |
| Gold (GLD) | −1.1% | −3.9% | −4.7% | +1.4% |
| Min‑volatility stocks (USMV) | +1.7% | +2.5% | +9.1% | +8.1% |
| −1× S&P 500 (SH) | +1.3% | −1.6% | −10.1% | −10.4% |
Last updated Oct 20, 2026. Members only.
| Exent regime pillar | Today |
|---|---|
| Liquidity | |
| Credit stress | |
| Economic cycle | |
| Sentiment | |
| Regime: Risk ON · Neutral · Risk OFF |
Price trend and volatility show what the market has already done. Exent’s macro regime score reads the backdrop behind it (liquidity, credit stress, the economic cycle and sentiment) and classifies it as Risk ON, Neutral or Risk OFF. Market intel members see today’s reading and get an alert when it changes.
Of the common shelters, only short T‑bills gained in every one of the last four selloffs; every other one lost money at least once. The table shows what each returned between the S&P 500’s peak and its trough, in Exent’s data (Jul 2016 – Sep 2026):
| Asset | Q4 2018 | COVID 2020 | 2022 bear | 2025 tariffs |
|---|---|---|---|---|
| S&P 500 (SPY), price | −20.2% | −34.1% | −25.4% | −19.0% |
| T‑bills (BIL) | +0.5% | +0.3% | +0.6% | +0.6% |
| 1–3y Treasuries (SHY) | +1.2% | +2.1% | −4.4% | +1.3% |
| Long Treasuries (TLT) | +4.5% | +14.2% | −29.3% | +0.8% |
| Gold (GLD) | +5.0% | −3.6% | −7.3% | +1.6% |
| Min‑volatility US stocks (USMV) | −12.5% | −33.0% | −17.3% | −8.6% |
| −1× S&P 500 (SH) | +23.8% | +42.3% | +27.8% | +23.1% |
Long Treasuries (TLT) were the best bond or cash shelter in the COVID crash and the worst in 2022. The difference was inflation: in 2022 rising prices pushed interest rates sharply higher, and bond prices fall when rates rise. The broad US bond index fell 13.1% in 2022 through December 28, Yahoo Finance’s Myles Udland reported; in 2008 it had risen 5.2%. In those two years, bonds cushioned a panic but not an inflation shock.
Gold fell in two of the four selloffs. Min‑volatility stocks (USMV) fell in all four: by much less than the index in 2018, 2022 and 2025, by almost as much in the COVID crash. The inverse fund SH rose every time, but it is a bet on the fall, not a place to wait: it lost 12.8% a year over the whole period. Short Treasuries (SHY) slipped 4.4% in 2022. More detail is in cash, T‑bills or bonds when you step aside and bonds as a hedge.
High‑beta stocks and the Nasdaq‑100 led over the decade, and paid for it in the crashes. Low‑volatility stocks returned much less, and their protection was uneven. The table compares buy‑and‑hold results, rebalanced monthly where it is a mix:
| Portfolio | Return a year | Volatility | Worst fall | 2022 bear | COVID 2020 |
|---|---|---|---|---|---|
| 100% S&P 500 | 15.2% | 17.8% | −33.7% | −24.5% | −33.7% |
| 100% Nasdaq‑100 (QQQ) | 21.5% | 22.3% | −35.1% | −34.8% | −28.6% |
| High‑beta S&P 500 (SPHB) | 18.7% | 28.5% | −46.8% | −30.1% | −46.6% |
| Min‑volatility US stocks (USMV) | 9.4% | 14.4% | −33.1% | −17.8% | −33.1% |
| Low‑volatility S&P 500 (SPLV) | 7.2% | 15.3% | −36.3% | −17.3% | −36.3% |
The high‑beta fund (SPHB) often beat the S&P 500 in strong years, for example 40.6% vs 28.7% in 2021. It lost more in weak ones, −20.6% vs −18.2% in 2022 and −15.5% vs −4.6% in 2018. Low‑volatility funds cut the 2022 loss by more than a quarter, but in the COVID crash they fell as far as the index or further, because almost every stock fell together.
Investors often watch the two side by side as a tell of risk appetite: when high‑beta stocks lead low‑volatility stocks, investors are paying up for risk. When to hold the high‑beta end is covered in when to own high‑beta stocks.
Most investors do not jump from all‑in to all‑out. They move along a ladder, one or two rungs at a time. Each rung down cut the loss in both recent crashes, at the cost of a lower long‑run return:
| Rung | Example | COVID 2020: largest fall | 2022 bear: largest fall | Return a year, Jul 2016 – Sep 2026 |
|---|---|---|---|---|
| Aggressive slice | 2× S&P 500 (SSO) | −59.3% | −46.7% | 24.2% |
| Index | S&P 500 (SPY) | −33.7% | −24.5% | 15.2% |
| Defensive stocks | Min‑volatility US stocks (USMV) | −33.1% | −17.8% | 9.4% |
| Balanced | 60% S&P 500 / 40% T‑bills | −20.8% | −15.0% | 10.1% |
| Half out | 50% S&P 500 / 50% T‑bills | −17.4% | −12.5% | 8.8% |
| Stepped aside | T‑bills (BIL) | −0.1% | 0.0% | 2.1% |
Illustrative: on a $600,000 portfolio, the index rung’s 2022 fall was about $147,000; the half‑out rung’s was about $75,000. The same move also gave up return in the good years, which is why investors tie it to a rule rather than leaving it permanent.
The top rung needs the firmest rule. Leveraged funds reset daily and are trading tools; FINRA warned in 2009 that they are typically unsuitable for retail investors who plan to hold them longer than one trading session. See when it is safe to hold leveraged ETFs and the SSO data page.
With a rule written before the selloff, not during it. Three kinds of rules are common. Trend rules move down a rung when the index closes below a long average such as the 200‑day. Drawdown rules move down after the portfolio falls a set amount from its high. Macro regime scores read the conditions behind prices (liquidity, credit stress, the economic cycle and sentiment) and set the rung from the reading: more exposure in risk‑on, the core in neutral, T‑bills in risk‑off.
Each needs a matching rule for moving back up, because the strongest rebound days tend to come in the middle of a selloff. In a taxable account every step down is a sale that can realize gains, so many investors make the bigger shifts inside an IRA or 401(k) and keep long‑held positions in taxable accounts. A regime reading describes conditions; it is not a forecast or personal advice.
A mix built to lose less when conditions turn against risky assets: a smaller share in stocks, defensive rather than high-beta shares, no leverage, and more in T-bills, money market funds or short Treasuries.
Investors commonly shift toward T-bills, money market funds and short-term Treasuries, and away from high-beta and leveraged holdings. In Exent’s data, short T-bills were the only parking place that gained in all four selloffs since 2018.
It depends on why stocks fall. Long Treasuries rose 14.2% during the 2020 COVID crash but fell 29.3% during the 2022 bear market, when inflation pushed interest rates up.
Partly. A min-volatility fund fell 17.8% in the 2022 bear vs 24.5% for the S&P 500, but 33.1% in the 2020 crash, almost as much as the index. They are still stocks.
Many investors step down one rung at a time. In the 2022 bear market a 50/50 mix of the S&P 500 and T-bills fell 12.5%, about half the index’s 24.5%, while keeping half the money invested.
Leveraged ETFs are trading tools that reset daily, and FINRA has said they are typically unsuitable for retail investors holding longer than one session. A 2x S&P 500 fund fell 59.3% in the 2020 crash, so investors who use them pair them with an exit rule.
Market Intelligence reads the market regime and tells you whether the backdrop favors taking risk or protecting capital.
Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.