Despite the stormy start to April with tariff news, markets rebounded later in the month.stanley45/iStockPhoto / Getty Images
It’s hard to believe, given the drama and noise and general despair a month ago, that markets are right about where they were before U.S. President Donald Trump’s “Liberation Day” tariff spectacle on April 2.
That means investors who did nothing – or, better yet, took the advice of colleague Tim Shufelt and somehow managed to tune out the president – are looking pretty good right now (and certainly less haggard than the rest of us).
However, exchange-traded funds (ETFs) trading data from last month show that many people couldn’t resist the pull of doing something.
According to a report from National Bank Financial (NBF), April, 2025 will go down in Canadian ETF history as having both the highest-ever trading volume for a single day (April 7; $14.5-billion) and for a week (April 1–7; more than $10-billion a day).
On April 7, for those who care to remember, stocks began to rebound after the previous week’s sell-off on rumours about a temporary tariff pause, which the White House denied, killing the dead-cat bounce. When that pause was officially announced on April 9, the S&P 500 gained more than 9 per cent.
That first, nutty week of the month saw $4.5-billion flow into Canadian ETFs, the highest weekly total this year. For the month, flows totalled $7.3-billion.
What were ETF investors buying and selling? NBF’s report on trade war tactics shows a mix of defensive positioning in low-volatility, buffer, money market and short-term bond funds, as well as brave dip-buying of broad-based equity funds. (In the U.S., investors poured US$20.9-billion into Vanguard S&P 500 ETF VOO-A last month, a new record for the almost 15-year-old fund.)
During the drawdown, NBF noted that companies with revenue exposure to the U.S. were hit hardest. Real estate, telecom, materials and consumer staples, which don’t rely on U.S. sales, did well; information technology and industrials suffered.
The report also highlighted several ETF trade ideas to reduce risk in portfolios. These included gold, infrastructure, balanced portfolios, international equities, low-volatility funds, mid-term government bonds and cash.
For U.S. equities, NBF recommended a “barbell” approach of equal-weight index funds to reduce concentration risk, and quality factors to overweight stable companies, offsetting risk from the economic cycle.
The report also pointed to buffer funds that protect against some losses while capping the upside, and market-neutral alternative funds for uncorrelated returns.
“However, given these ETFs’ reduced equity risk exposure, they have generally underperformed broad equity benchmarks during bull markets in the past,” the report warned about the trade ideas.
Investors’ appetite for risk will depend on whether they think April’s slump was due to a tariff bogeyman who will be negotiated away before the 90-day extension is up in July, or the beginning of a painful reordering of the global economy.
Of course, investors may also decide not to put faith in any grand plan or agenda beyond their financial plan, choosing to block out the noise and do nothing.
– Mark Burgess, Globe Advisor assistant editor
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