Defensive investment strategy

An investment strategy that attempts to minimise the risk of losing principal. Such a strategy would place a high percentage of investable assets in bonds, cash equivalents, and defensive stocks. This strategy is characterised by low risk and low return. Like defensive stocks, it tends to produce relatively stable performance throughout the economic cycle. It tends to underperform the market index during bull markets or economic booms and outperform the market index during bear markets or downturns. See bear and bull market.