Wall Street has experienced heightened volatility in recent weeks, with major indices swinging sharply. The growing uncertainty over former President Donald Trump’s trade tariff policies and worsening U.S.-China relations have been major contributors to market turbulence. SPDR S&P 500 ETF Trust SPY lost over 7% in the past month (as of April 17, 2025).

In comparison, several quality ETFs stayed steady amidst the tariff turmoil. VanEck MSCI International Quality ETF QUAL has lost 5.8% during the above-mentioned period. Let’s delve a little deeper.

Fed Chair Powell Flags Economic Risks

Federal Reserve Chair Jerome Powell warned that escalating trade tensions could lead to inflation while simultaneously slowing economic growth — a combination that could trigger stagflation (read: Fed Pause Amid Stagflation Risks? Smart ETF Moves to Follow).

He stated that the central bank is not in a hurry to cut interest rates and will wait for more clarity regarding the administration’s trade stance. Powell acknowledged the potential dilemma the Fed could face: managing inflation without stalling economic progress.

Consumer Confidence Dips Despite Encouraging Data

While recent inflation and retail sales data have shown strength, consumer sentiment has continued to decline. According to the University of Michigan's latest survey, consumer sentiment in April fell to its lowest point since 2022. The survey also reported that one-year inflation expectations jumped to 6.7%, the highest since November 1981, up from 5% in March.

Over a five-year horizon, inflation expectations rose to 4.4%, marking the highest level since June 1991. Many analysts believe these indicators signal a higher risk of recession, as economic activity appears to be slowing.

Temporary Tariff Relief Offers Little Clarity

Although Trump has paused “reciprocal” tariffs for 90 days on imports from about 75 countries, uncertainty remains regarding future trade actions. He is expected to announce a new tariff on imported semiconductors ahead, though he has indicated there may be some flexibility for certain companies in the sector.

NVIDIA Hit by New Export Restrictions

NVIDIA NVDA shares plummeted 6.7% last week as reports surfaced that the company would be affected by new U.S. government restrictions on semiconductor exports to China. These limitations are projected to cost the chipmaker approximately $5.5 billion in charges.

Why Quality Investing?

Quality stocks are rich in value characteristics with healthy balance sheets, high return on capital, low volatility, elevated margins, and a track record of stable or rising sales and earnings growth. These stocks thus reduce volatility when compared to plain vanilla funds and hold up rather well during market swings.

Quality ETFs in Focus

Against this backdrop, below we highlight a few quality exchange-traded funds (ETFs) that have surpassed the S&P 500’s performance over the past month (as of April 17, 2025).

SPDR MSCI EAFE StrategicFactors ETF QEFA – Down 2.6%

The MSCI EAFE Factor Mix A-Series Index captures large and mid-cap representation across 22 developed market Europe, Australasia and Far East countries, and aims to represent the performance of value, low volatility, and quality factor strategies. The fund yields 2.90% annually and charges 30 bps in fees.

iShares MSCI Intl Quality Factor ETF IQLT– Down 3.1%

The underlying MSCI World ex USA Sector Neutral Quality Index seeks to capture the performance of stocks deemed by MSCI Inc by identifying common stocks with high quality scores based on three main fundamental variables: high return on equity, stable year-over-year earnings growth & low financial leverage, while maintaining reasonably high trading liquidity, investment capacity & moderate index turnover. The fund charges 30 bps in fees and yields 2.68% annually.

SEI Enhanced US Large Cap Quality Factor ETF SEIQ – Down 3.8%

The SEI Enhanced U.S. Large Cap Quality Factor ETF seeks to provide long-term capital appreciation by investing primarily in U.S. common stocks with superior quality. It yields 1.10% annually and charges 15 bps in fees.

SPDR MSCI World StrategicFactors ETF QWLD – Down 4.3%

The underlying MSCI World Factor Mix A-Series Index captures large and mid-cap representation across 24 developed countries and aims to represent the performance of value, low volatility, and quality factor strategies. The fund charges 30 bps in fees and yields 1.75% annually.

FlexShares International Quality Dividend Index Fund IQDF – Down 5.1%

The underlying Northern Trust International Quality Dividend Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only international securities issued by non-U.S.-based companies with an emphasis on long-term capital growth and a targeted overall beta similar to that of the Northern Trust International Large Cap Index. The fund charges 47 bps in fees and yields 6.76% annually.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SPDR S&P 500 ETF (SPY): ETF Research Reports

iShares MSCI USA Quality Factor ETF (QUAL): ETF Research Reports

iShares MSCI Intl Quality Factor ETF (IQLT): ETF Research Reports

SPDR MSCI World StrategicFactors ETF (QWLD): ETF Research Reports

FlexShares International Quality Dividend ETF (IQDF): ETF Research Reports

SPDR MSCI EAFE StrategicFactors ETF (QEFA): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research