5 ETF Picks for April

April 2025 will lengthy be remembered for an enormous market rout brought on by Trump tariffs and their potential repercussions. The primary week of April was the worst for Wall Road since 2020. Markets have shed an enormous $5.4 trillion in worth within the two days that adopted President Trump’s big-time tariff bulletins on main nations final Wednesday.

The S&P 500 is now at its lowest stage in 11 months. The Nasdaq, small caps and mid-caps have entered a bear market within the first week of April. The Dow Jones and the S&P 500 are in correction territory. Traders at the moment are striving to gauge what lies forward for the remainder of the month.

Backdrop of This 12 months’s Market Massacre

Traders ought to word that market troubles started in late February when the Chinese language AI startup DeepSeek revealed its low-cost synthetic intelligence mannequin, which disrupted Wall Road’s tech sector.

Since then, tensions have escalated, particularly after the Trump administration unexpectedly unveiled an aggressive tariff coverage dubbed “Liberation Day,” on April 2. The S&P 500 has now dropped over 17% from its Feb. 19 peak, making it the steepest decline since 2022 and one of many worst begins to a yr on report.

Rising Recessionary Fears

Attributable to Trump tariff fears, recessionary dangers have risen.Goldman Sachseconomists, led by Jan Hatzius, now see a 45% chance of a U.S. recession in the next 12 months, up from 35% final week. Earlier than this, Goldman had been at a 20% recession chance threat, as quoted on Yahoo Finance.

What Lies Forward?

In additional than half of the bear markets since 1945, the S&P 500 hit a low level inside two months of initially falling under the 20% threshold. Furthermore, ahead returns have been largely optimistic, Bespoke pointed out in 2022 (on Forbes), with the index rising a median of seven% and practically 18%, respectively, over 6- and 12-month durations.

Nonetheless, bear markets that happen earlier than a recession are extra prolonged (lasting 449 days in comparison with 198 days with no recession), with steeper losses (a median decline of 35% in comparison with 28%), in keeping with Bespoke. Therefore, if the U.S. financial system can keep away from a recession, shares could be in a greater place going ahead.

Traders ought to word that since 1945, in each occasion when the S&P was down by 3% or extra in March, it was then larger in April, as quoted on a Zacks.com article. This occurred seven occasions, and every time it was larger in April.

ETF Picks for April

In opposition to this backdrop, under we spotlight a number of exchange-traded funds (ETFs) that may very well be secure bets on the present stage. Given the heightened market chaos, it’s higher to shift into secure, worthwhile and defensive sectors.

Utilities – The Utilities Choose Sector SPDR Fund (XLU)

On a year-over-year foundation, eight of the 16 Zacks sectors are anticipated to take pleasure in optimistic earnings development in Q1, with the Utilities sector earnings projected to develop 14.5%. Utility shares additionally get a safe-haven tag. Utilities present important providers akin to electrical energy, water and pure gasoline, which individuals and companies depend on no matter financial situations. This makes the sector non-cyclical, which means demand stays secure even throughout recessions.

Utilities can usually go elevated prices to customers via regulated fee changes. Furthermore, the most recent AI growth has brightened the demand for utilities much more as this sector satisfies the AI business’s vitality wants (learn: Time for Defensive Sector ETFs?).

Healthcare – Well being Care Choose Sector SPDR Fund (XLV)

The Healthcare sector is predicted to witness 34.1% development in Q1 earnings. The healthcare sector is “recession-proof” as individuals want medical care whatever the financial situation. Many individuals have personal or public insurance coverage that covers care even when private revenue declines. The Zacks Rank #1 (Robust Purchase) XLV yields 1.73% yearly.

Quick-Time period Bonds – iShares Quick Treasury Bond ETF SHV

A slowing U.S. financial system (if in any respect occurs) will minimize inflationary issues. Many analysts are favoring short-term U.S. treasuries, anticipating them to learn extra from future rate of interest cuts by the Federal Reserve. Quick-term bonds have a decrease rate of interest and default dangers. Furthermore, some short-term bond ETFs supply hefty yields. The SHV ETF yields 4.79% yearly.

Dividends – ProShares S&P 500 Dividend Aristocrats ETF NOBL

Dividend-paying shares present a gentle revenue stream and assist mitigate potential losses throughout weaker market durations. These shares supply the very best of each worlds — security within the type of payouts and stability within the type of mature firms which can be much less risky to the massive swings in inventory costs.

Excessive-quality dividend ETFs like NOBL, with a historical past of constant dividend funds and development, can supply each revenue and the potential for capital appreciation over the long run. The ETF yields 2.25% yearly (learn: Tap Dividend ETFs as Wall Street Wobbles).

Multi Asset ETFs – SPDR SSgA Multi-Asset Actual Return ETF RLY

The ETF seems to supply publicity to home and worldwide inflation-protected securities, actual property securities, commodities, infrastructure firms, and firms in pure assets and/or commodity companies, which can embody agriculture, vitality, and metals and mining firms in addition to industrial, and utility firms. The ETF RLY yields 3.25% yearly.