ETF Markets See Defensive Shift as U.S. Tariffs and Management Drive New Trends

Defensive Sectors and Gold ETFs Take Center Stage

The Exchange-Traded Fund (ETF) landscape is undergoing a notable shift as rising market volatility, driven by U.S. tariff policy, prompts investors to seek refuge in defensive assets. The Biden administration’s sweeping tariffs on a broad range of imports, announced in early April 2025, led to a steep selloff in major U.S. indices. The S&P 500 plunged over 10% in just two days, shaking investor confidence and redirecting capital flows.

As a result, gold has re-emerged as a safe-haven asset. The SPDR Gold Shares ETF (GLD) recently surpassed $100 billion in assets under management, reflecting surging investor demand. Similarly, sector-specific ETFs focused on consumer staples, utilities, and healthcare are seeing inflows as traders pivot to historically resilient segments during market downturns.

A report from Business Insider highlights that gold is now the top pick among institutional investors navigating an uncertain macroeconomic backdrop, particularly in light of protectionist trade policies.

Active and International ETFs Rise in Popularity

Another trend reshaping the ETF landscape is the growing appeal of active management and international diversification. According to Brown Brothers Harriman’s 2025 Global ETF Investor Survey, 97% of institutional investors plan to increase their exposure to active ETFs this year. These funds, which allow managers to adjust portfolios dynamically in response to market shifts, are increasingly preferred in today’s fast-moving environment.

In addition, global equities are becoming more attractive as U.S. market risks escalate. ETFs like the Vanguard FTSE Developed Markets ETF (VEA), which excludes U.S. stocks and targets companies in Europe and Asia, have outperformed U.S.-focused benchmarks in recent weeks. With European markets showing relative resilience and emerging markets gaining traction, global diversification is playing a bigger role in portfolio construction.

Bloomberg also reported that ETF launches are hitting record levels in 2025, with over 1,000 new funds expected to debut this year. While this boom reflects continued investor appetite, it also raises concerns about market saturation and the long-term viability of niche or complex products (source).

Conclusion

The ETF market in 2025 is being redefined by investor caution and innovation. As geopolitical pressures such as U.S. tariffs drive volatility, traders are moving into gold, defensive sectors, and internationally diversified funds. At the same time, the rise of active ETFs signals a broader desire for flexibility and adaptability in portfolio management. For investors navigating these dynamic conditions, aligning with these evolving strategies may be essential for risk-adjusted performance in the year ahead.