Three ETFs That Could Outperform in a Volatile, Tariff-Driven Market Environment

SPDR Bridgewater All Weather ETF

ALLW

-0.13%

Debuting on March 5, 2025, the SPDR Bridgewater All Weather ETF

couldn’t have launched at a better time. Just one month later, “Liberation Day” saw the Trump administration introduce blanket tariffs on most major trading partners, sparking a fresh wave of market volatility. If there was ever a moment to test an all-weather portfolio, this was it.

ALLW is built on Bridgewater’s flagship All Weather strategy, developed by Ray Dalio. It follows a leveraged risk parity approach, allocating across four major asset classes: global equities, nominal bonds, inflation-linked bonds, and commodities. Instead of allocating based on market size or predictions, risk parity aims to spread risk evenly across asset classes based on volatility and correlation.

Bridgewater provides the daily model inputs, while State Street Global Advisors manages the fund’s portfolio. The ETF uses derivatives such as swaps and futures to gain exposure efficiently, which also allows it to apply leverage.

As of April 21, its allocation stood at approximately 72.6% t to global nominal bonds, 42.9% to global equities, 36.6% to commodities, and 31.9% to inflation-linked bonds. That adds up to about 184% total exposure, reflecting the use of leverage for capital efficiency.

The logic is simple. Build a balanced portfolio that maximizes return per unit of risk, then scale it up to reach the desired risk/return level. You get a portfolio engineered to adapt to a wide range of economic conditions without relying on market timing.

While the 0.85% expense ratio may seem steep, it is reasonable considering you’re getting access to an institutional-quality strategy. The fund already has more than $160 million in assets under management, which shows growing investor interest.

The all-weather concept means you can hold this through virtually any environment, whether it’s rising inflation, slowing growth, falling rates, or a combination of all three.

In a worst-case scenario like stagflation caused by tariffs—where growth slows but prices rise—ALLW has built-in defenses. Commodities and inflation-linked bonds are likely to perform well in that setting, offsetting the drag from equities and nominal bonds.

JPMorgan Equity Premium Income ETF

JEPI

-0.4%

A rangebound, high-volatility market is exactly the kind of environment where the JPMorgan Equity Premium Income ETF

is built to shine. We already saw it outperform during similar conditions in 2022, when sharp swings and limited upward momentum created a sweet spot for its strategy.

JEPI is the largest actively managed ETF in the world, and it earns that status with a straightforward but effective approach. First, it actively selects a subset of S&P 500 stocks, screening for lower volatility and more stable fundamentals. This forms the equity core.

Then, to generate income, JEPI sells out-of-the-money covered calls on the S&P 500 using equity-linked notes (ELNs), which are structured derivatives designed to mimic call-writing exposure without owning the index directly.

This strategy does two key things. It lowers the portfolio’s downside risk compared to the full S&P 500 and replaces some of the market’s capital gains potential with option premium income. And in today’s environment, with volatility elevated due to geopolitical risk and tariff uncertainty, that premium income is substantial.

The April distribution came in at $0.40794 per share, a noticeable increase from March’s payout of $0.32765 per share. This jump highlights the effect higher volatility has on premium generation. Option prices rise as implied volatility increases, meaning JEPI can collect more cash from selling calls.

The combination of a defensively positioned, low-beta equity portfolio and a disciplined options overlay makes JEPI a strong pick for today’s choppy, sideways market. If you believe volatility will stick around while equity gains remain capped, JEPI is one of the few ETFs specifically built to thrive in that setup.

iShares U.S. Broker-Dealers & Securities Exchanges ETF

IAI

-0.76%

This one isn’t defensive by any means, but I believe the iShares U.S. Broker-Dealers & Securities Exchanges ETF

could be uniquely insulated from tariff-related fallout.

Tariffs typically hit industries with heavy exposure to global trade—think autos, semiconductors, industrials, or consumer goods. They raise input costs, disrupt supply chains, and lower export competitiveness. But the companies in IAI, which tracks the Dow Jones U.S. Select Investment Services Index, operate in a completely different lane.

Names like S&P Global, CME Group, MSCI Inc., Moody’s, and Intercontinental Exchange are unlikely to be affected by tariffs, because they’re essentially left out of the tariff equation entirely. These firms don’t make physical goods or rely on cross-border manufacturing. They’re not moving freight or sourcing components from abroad.

Their performance is driven by deal flow, new listings, data licensing, index revenue, and trading volume. None of those are directly impacted by whether the U.S. slaps a tariff on foreign steel or electronics. In other words, they’re not targets, and they’re unlikely to get caught in the downstream effects either.

That said, IAI still carries market risk. If equities sell off further, this ETF will take a hit, don’t get me wrong. But compared to sectors like transportation, industrials, or consumer discretionary, broker-dealers and exchanges are better positioned to weather the tariff storm.

The expense ratio is 0.40 percent, which is standard for a sector-specific ETF. For investors looking for tariff-insulated equity exposure without going fully defensive, IAI offers a smart middle ground.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.