If you're not feeling whipsawed by the S&P 500 this year — you must not be paying attention. And some investors are looking to specific ETFs to help smooth out the discomfort.
Gold and dividend-paying stock ETFs are gaining popularity with investors looking for a safe haven from President Donald Trump's tariff tirade. Even after the rally on April 9 following Trump backing down from some tariffs, the S&P 500 is still down 6.4% this year.
And all this drama is weighing on investors. The CBOE Volatility Index, a measure of investors' fear, has roughly doubled this year. And the market is braced for wild swings with just a social media post from Trump.
"Investors should brace for more market volatility in the coming weeks and months as Trump's trade policy becomes more coherent," said Michael Arone, chief investment strategist of the US SPDR business of State Street Global Advisors. "The trade war may not be over but at least for today investors have won the battle."
Gold Glitters As A Safe Haven
Few asset classes have held up as well as gold this year so far. The $90.9 billion-in-assets SPDR Gold Trust ETF is up roughly 18% this year.
And it makes sense for gold to rally. With inflation a real risk due to tariffs, physical assets tend to hold their purchasing power. Gold's reputation as a store of value is a big selling point now. And all the largest gold ETFs are up just as much as SPDR Gold. IShares Gold Trust, with $42 billion in assets, is up the same amount.
"Gold ETFs have been a safe haven for investors to ride out the market volatility and provide a hedge against potential inflation," said Todd Rosenbluth, director of research at TMX Vetta Fi. Gold ETFs are compelling as they expose your portfolio to yellow metal at a low cost.
Two gold ETFs with especially low fees are SPDR Gold MiniShares and iShares Gold Micro Trust, Rosenbluth says. SPDR Gold MiniShares charges just 0.1% annually.
Some investors are taking the commodity rush a step further. There has been flows into Invesco Optimum Yield Diversified CommodityETF and Neuberger Berman Commodity Strategy, Rosenbluth says. "These funds offer exposure to energy and agriculture commodities, too," he said.
Going Beyond Gold
ETFs that own dividend stocks are also emerging as powerful places to hide amid the S&P 500 upheaval. Their share prices aren't rising as much as gold ETFs, but they pay something gold does not: income.
And cash dividends can help soften the blows of selling. Take the $64.6 billion-in-assets Schwab U.S. Dividend Equity ETF. It's down 5.3% this year on a price basis. But it also pays an annual yield of 4.2%, which helps ease the pain.
Not all large dividend ETFs pay that much. The $79.2 billion-in-assets Vanguard Dividend Appreciation ETF only yields 2.1%. But the shares are only down 4.7% this year.
"These funds own companies that have stable dividend payments that will likely have the cash to support ongoing payments," Rosenbluth said. "Dividend ETFs tend to hold up better than the broader equity market but still have downside risk."
Some investors are using more complicated tools to limit exposure. Innovator Defined Wealth Shield ETF and iShares Large Cap Deep Buffer ETF use options on a quarterly basis to limit risk. Innovator Defined Wealth Shield is down less than 1% this year.
Playing it safe won't make sense once the S&P 500 bounces. But for now, it's a relief. "These defensive ETFs will lag the market on the eventual recovery, but can help investors that prefer a more conservative approach to the equity market," Rosenbluth said.
Top Gold And Dividend ETFs
| ETF | Symbol | Assets ($ billions) | YTD % ch. | Yield |
|---|---|---|---|---|
| SPDR Gold Trust | GLD | $90.9 | 17.9% | 0.0% |
| Vanguard Dividend Appreciation | VIG | 79.2 | -4.7 | 2.0 |
| Schwab U.S. Dividend Equity | SCHD | 64.6 | -5.3 | 4.2 |
| Vanguard High Dividend Yield | VYM | 53.9 | -3.8 | 3.2 |
| iShares Gold Trust | IAU | 42 | 17.9 | 0.0 |
| iShares Core Dividend Growth | DGRO | 27.8 | -4.0 | 2.5 |
| SPDR S&P Dividend | SDY | 18.6 | -2.8 | 2.8 |
| SPDR Gold MiniShares Trust | GLDM | 12.9 | 17.8 | 0.0 |
| abrdn Physical Gold Shares | SGOL | 4.6 | 17.8 | 0.0 |
| iShares Gold Trust Micro | IAUM | 2.2 | 17.8 | 0.0 |
