The market roller-coaster ride is showing no signs of slowing down, as stocks came roaring back the week ending April…
The market roller-coaster ride is showing no signs of slowing down, as stocks came roaring back the week ending April 25, with bulls hoping global trade tensions may be easing.
Growth sectors, including tech and consumer discretionary, led the charge, along with small-cap stocks, a traditional risk-on asset class.
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However, some financial planners and other professional investors say caution is still in order, as plenty of uncertainty remains.
Here’s a look at 10 asset classes that are getting attention, for various reasons, at this volatile moment in the market:
— Gold.
— Utilities stocks.
— Thematic ETFs.
— Emerging-market equities.
— Private credit.
— Private equity.
— Commodities.
— High-yield bonds.
— Real estate.
— Cash and cash equivalents.
Gold
Gold tends to rise during times of equity market turbulence, and we’re seeing history repeat itself.
While gold has valid uses, such as in jewelry and industrial and scientific applications, its role as a safe-haven investment pushes it higher relative to stocks.
The SPDR Gold Shares (ticker: GLD) ETF is up more than 20% year to date, trouncing the S&P 500’s performance.
Michael Wagner, co-founder of Omnia Family Wealth in Miami, notes that gold began its most recent uptrend in 2023 as tensions rose in the Middle East.
“Keep in mind that any asset that experiences sharp increases in value can also decline just as rapidly is investor sentiment shifts,” Wagner says. “It’s critical not to over-invest in a commodity like gold, as boom and bust cycles are common. It’s meant to temper the gyrations of your stock portfolio, not take over as the driver of growth.”
Utilities Stocks
This normally sleepy corner of the S&P 500 is in the lead year to date, with the Utilities Select Sector SPDR ETF (XLU) posting a return of 5%.
Utilities are generally protected from higher tariff-related costs, as regulators tend to allow them to pass higher costs along to consumers. Utilities are also reliable dividend payers, making them appealing during market downturns for their stability and yield.
In addition, optimism about the energy needed to power artificial intelligence applications has been a growth driver.
Thematic ETFs
Fund managers will continue to come up with ideas in the hope of capitalizing on the latest investing trends. Those themes don’t always work out, even if they seemed like a no-brainer to attract investment dollars. Sometimes the timing of a particular market cycle just doesn’t help, as any given theme falls out of favor.
One of the best-known thematic ETFs is the ARK Innovation ETF (ARKK), focused on companies engaged in what fund manager Cathie Wood calls “disruptive innovation.” This ETF was a standout in 2020 and performed well in 2023, but has seen significant outflows this year.
“We generally advise steering clear of most thematic ETFs,” says Steven Rogé, chief investment officer and CEO at R.W. Rogé & Co. in Beverly, Massachusetts. He points out that thematic funds can be expensive relative to simple, broad-market index funds. “They also have a knack for attracting crowds of investors near market tops, right before prices potentially fall off,” he says.
Emerging-Market Equities
While U.S. stocks correct, emerging-market ETFs such as the Vanguard FTSE Emerging Markets ETF (VWO) and the iShares MSCI Emerging Markets ETF (EEM) have year-to-date gains.
Emerging-market stocks are generally more risky than developed-market stocks, but uncertainties about tariffs and the Trump administration’s economic policies have eroded confidence in U.S. stocks, as well as weakened the dollar.
Analysts also cite strength in Chinese equities as a driver for emerging markets. For example, the iShares MSCI China ETF (MCHI) is up more than 10% year to date.
“The technology sector has been a key contributor to emerging markets’ performance year to date,” Ola El-Shawarby, portfolio manager for emerging-markets equity at VanEck, wrote in an April note.
Private Credit
Businesses sometimes turn to private credit when they need a loan but traditional banks aren’t offering attractive terms. Private credit offers a way for investors to access an alternative form of fixed income. These investments often carry higher yields than other forms of fixed income. Of course, higher yields typically mean higher risk.
Historically, private credit was only available to institutions, such as pension funds or insurance companies, or accredited investors, but now individual investors can buy securities such as the SPDR SSGA IG Public & Private Credit ETF (PRIV), which launched in February.
But the old saying, “Just because you can, doesn’t mean you should,” may apply to this asset class. “We’re cautious when it comes to private credit, and would look to trim positions,” says Rogé. “The recent relative calm might be a good chance to lower exposure, particularly to highly leveraged companies that look vulnerable heading into a potential economic slowdown.”
Private Equity
This is a form of investment that involves ownership in companies that don’t trade on the public markets.
Private equity investors typically buy privately held companies or buy public companies and take them private, with the aim of a sale or another public offering at a later date.
As with private credit, these investments weren’t always available to individuals, as they tend to be high risk. However, now ETFs such as the Invesco Global Listed Private Equity ETF (PSP) offer access.
“Private equity shows signs of recovery, yet it no longer represents the extensive opportunity it once did,” says Joshua Mangoubi, chief investment officer at Considerate Capital in Chicago.
The market now supports new transactions, he adds, yet company prices remain elevated despite ongoing economic instability. That means investors have to be selective.
“With higher interest rates, success now hinges on choosing managers who create real value, not just add leverage,” Mangoubi says.
[Read: 7 Up-and-Coming Stocks to Buy Now]
Commodities
With inflation levels remaining elevated, commodities including agricultural products, oil and precious metals may offer a hedge, as they offer portfolio diversification and low correlation to stocks.
Historically, commodities perform well during inflationary times and in economic recessions.
One current example of a top-performing commodities ETF is the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB). Its holdings consist of commodities futures contracts and short-term Treasury bills as collateral. The ETF is up 4% year to date.
In addition to gold, which, as noted above, has performed well this year, commodity exposures include natural gas, crude oil, copper, soybeans, corn, silver, aluminum and cattle.
High-Yield Bonds
High-yield bonds, also called “junk bonds,” are debt securities issued by companies with lower credit ratings than investment-grade bonds. Bond rating agencies consider these companies to have a higher risk of default.
For that reason, investors demand to be paid more to hold this debt, hence the higher yields.
Although these bond issuers may suffer more than other companies in a recession, high-yield bonds are currently outperforming U.S. stocks.
For example, the VanEck Fallen Angel High Yield Bd ETF (ANGL) has eked out a small positive return year-to-date.
According to VanEck, “Fallen angels, high-yield bonds originally issued as investment-grade corporate bonds, have had historically higher average credit quality than the broad high-yield bond universe.”
“Despite being in the high-yield category, ANGL has certain advantages over other high-yield ETFs, such as a more focused strategy on bonds that have been downgraded rather than those with lower credit ratings across the board,” says John Murillo, chief dealing officer at B2Broker, a Dubai-based investing platform.
Real Estate
When either the stock market or the economy, or both, head south, investors can often find opportunity in real estate.
There was a general slowdown in real estate syndicates and funds raising new capital in the first quarter, says Asaf Raz, vice president of marketing at Agora, a New York-based company that specializes in real estate fundraising and investment management.
That slowdown, Raz says, is partially connected to the recent market uncertainty, interest rates and Trump administration policies. “However, when the stock market reacts quickly, real estate tends to have delayed responses, and investors who are looking for more stable investment vehicles turn to real estate,” he says.
Raz says Agora’s partner firms are showing an increased interest in investing in real estate. “In addition, many funds that raised capital in the past few years must deploy their capital and make acquisitions; otherwise, that money will be returned to investors,” he says. “We expect deal flow to increase as well due to these special circumstances, especially around retail, distressed multifamily and industrial assets.”
Cash and Cash Equivalents
With interest rates still high, investors who salt away money in a high-yield savings account can earn some interest while protecting their money from market volatility.
Some money market accounts are offering slightly higher rates. “Cash isn’t dead money anymore; it’s finally paying real returns,” says Mangoubi. “You can earn 4% to 5% right now without locking up your savings or taking big risks. But this window won’t stay open forever. We’re helping clients make the most of it today and stay ready for when the tide turns.”
Cash isn’t a place to permanently park the bulk of your retirement funds, but it can offer a way to preserve capital for short-term expenses or, as Mangoubi says, for investment at a later date.
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Update 05/02/25: This story was previously published at an earlier date and has been updated with new information.
