Navigating Trade Wars: Low–Volatility Stocks as Safe Havens

As of March 4, 2025, global markets continue to grapple with the complexities of ongoing trade tensions.In times of economic uncertainty, identifying resilient investment strategies becomes paramount. One approach gaining traction involves focusing on low-volatility stocks, which have historically demonstrated the potential to outperform during periods of trade wars and market turbulence.

The rise of Trade War 2.0

Escalating trade disputes,exemplified by tariffs imposed on key trading partners,sparked retaliatory measures and fueled concerns about potential economic stagnation. These developments have impacted major market indices, with the S&P 500, Nasdaq composite, and Dow Jones industrial Average experiencing declines. Such volatility underscores the need for defensive investment strategies.

According to Julian Emanuel, senior managing director, “Defense remains the best offense.” This sentiment highlights the strategic advantage of prioritizing low-volatility stocks during periods of heightened trade tensions.

healthcare: A Defensive Stronghold

The healthcare sector is often regarded as a defensive hedge,tending to maintain stability even during economic downturns. Several healthcare giants, including AbbVie, Centene, Humana, DaVita, and UnitedHealth Group, are positioned to perform favorably amidst trade war uncertainties. Year-to-date, the healthcare sector has demonstrated its strength, rising 8% to become the leading sector within the S&P 500, according to factset data.

• AbbVie: Showing strong performance in 2025, up 17%, AbbVie’s growth is bolstered by robust fourth-quarter results and its entry into the rapidly expanding obesity treatment market.
• DaVita: while DaVita shares are down nearly 4% this year, analysis suggests the kidney health company is poised for a potential breakout, potentially outperforming the S&P 500 in the long term.

Apple: A Tech Titan’s Safe-Haven Status

Even within the technology sector, defensive plays exist. Apple, despite a 4.7% share drop this year, is emerging as a safe-haven option.Ben Reitzes, head of technology research at Melius Research, noted that Apple has become the safe-haven play of the “Magnificent Seven” since the deepseek emergence, as more use of artificial intelligence could lead to a new upgrade cycle for iPhones.

Defense Stocks: A Shield Against Market Volatility

Defense stocks,such as Booz Allen Hamilton and Lockheed Martin,offer another avenue for mitigating risk during trade wars. While both stocks have experienced declines in 2025 due to potential defense spending cuts, their performance is less correlated with the broader market, relying more on government budgets and geopolitical factors.

• Booz Allen Hamilton: Off nearly 16% in 2025.
• Lockheed Martin: Down more than 6%.

However,defense contractors are considered to be less tied to the broader market’s performance and therefore more reliable during periods of volatility,as they are more dependent on government budgets and war-related activities rather than the state of the economy.

Strategies for Navigating Trade War Volatility

Investors seeking to safeguard their portfolios during trade wars should consider the following strategies:

• Diversify into low-volatility sectors: Increase exposure to sectors like healthcare and defense, which tend to be more resilient during economic uncertainties.
• Evaluate individual stock performance: Conduct thorough research on individual companies within these sectors, focusing on factors such as financial stability, growth potential, and dividend yields.
• Monitor macroeconomic trends: Stay informed about trade negotiations, tariff implementations, and other geopolitical events that could impact market sentiment.

Conclusion: Position Your Portfolio for Resilience

In the face of ongoing trade tensions and market volatility, adopting a defensive investment strategy centered on low-volatility stocks can provide a measure of stability. By strategically allocating capital to sectors like healthcare and defense, and by carefully evaluating individual stock performance, investors can better position their portfolios to weather the storm. Consider consulting with a financial advisor to tailor a strategy that aligns with your specific risk tolerance and investment goals. Don’t wait; take proactive steps today to protect your investments in an uncertain global landscape.