After the last two trading days, some investors might be questioning their exposure to U.S. equites. On the heels of consecutive 20%-plus calendar year gains for the Vanguard 500 ETF (VOO ), large-caps have sold off.
VOO was down more than 4% through the first quarter and since then things have only worsened. Meanwhile, the Invesco QQQ Trust (QQQ ) had already fallen 8% in the first three months following an even stronger two-year run. However, VOO and QQQ are just two of the ETFs available for portfolio usage.
Fixed Income Should Be Core to Your Portfolio
In the first quarter of 2025, the Vanguard Total Bond Market ETF (BND ) rose 2.8% in value. The $128 billion fixed income index fund serves for many as a core piece of their diversified portfolio. In general, bonds tend to be less volatile than stocks.
BND has an average duration of six years and sports a 4.4% 30-day SEC yield. Assets are primarily invested in U.S. government bonds (68% of assets), with the majority of the remainder in low-investment-grade corporate bonds.
Increasingly we are finding advisors turning to actively managed core fixed income ETFs. These funds seek to outperform an index rather than replicate it with top-down allocations and security selections. The Fidelity Total Bond ETF (FBND ) and the T. Rowe Price QM US Bond ETF (TAGG ) are a few examples. TAGG and FBND rose 3.2% and 2.9%, respectively, in the first quarter of 2025.
Commodities Shining Brightly to Start the Year
Many people turn to commodities to diversify their portfolios. Commodities are less sensitive to inflation than other asset classes. They can be a safe haven during times of uncertainty.
The SPDR Gold MiniShares ETF (GLDM ), which has a modest fee of 0.10%, is a good example. The fund rose 19% in the first quarter of 2025, providing exposure to the precious metal.
However, some investors prefer a more diversified approach to commodity investing rather than just investing in gold. The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC ) invests in more than a dozen commodities. Gold is joined by various agriculture and energy commodities as well as copper and silver. PDBC was up 4.9% in the first quarter.
Meanwhile, an active commodity ETF could add value to a portfolio. For example, the Neuberger Berman Commodity Strategy ETF (NBCM ) rose 8.3% in the first three months of the year. Relative to PDBC, NBCM was recently overweight to gold and underweight to Brent crude.
You Can Protect Your Equity Downside
The sell-off in VOO and QQQ has been sharp. However, there are a wide array of options-based ETFs that offer a lower-risk approach. As expected, they held up relatively well in the first quarter. For example, the NEOS Nasdaq 100 Hedged Equity Income ETF (QQQH) and the Calamos Laddered S&P 500 Structured Alt Protection ETF (CPSL) were down just 4.2% and 0.5%, respectively. These losses were narrower than QQQ and VOO.
So if you are overly exposed to equities and feeling the pain in April, remember there are many other ETFs in the toolbox worthy of consideration.
For more news, information, and analysis, visit the Innovative ETFs Channel.
