Volatility is surging, with the VIX "fear" index climbing to its highest level so far in 2025 as of March 3. Investors have been spooked by an inverted yield curve in Treasury rates and corresponding concerns about a potential recession, as well as uncertainty surrounding tariffs by the Trump administration, dropping consumer confidence levels, and more. In the midst of these challenges, exchange-traded funds (ETFs) can be a haven and a way to diversify a portfolio to protect against headwinds.
Investors looking to expand their ETF focus in the new year might consider any number of defensive plays that aim to minimize downside risk in a tumultuous market. More adventurous investors might also use this as an opportunity to invest in underappreciated ETFs—funds that have had a strong showing so far in 2025 but which have relatively modest assets under management of $25 billion or less. These are not the most obscure ETFs available—to be sure, there are plenty with asset bases just a fraction of that level—but they are also well behind many of the most popular ETF options investors tend to gravitate toward.
Strong 2025 Performance and Global Exposure With High Dividends
The iShares MSCI EAFE Value ETF (BATS: EFV) may appeal to investors seeking increased exposure to equities outside of the North American space. Focusing on Europe, Australia, Asia, and the Far East (EAFE), EFV prioritizes companies with value characteristics such as low pricing multiples.
[content-module:CompanyOverview|BATS:EFV]Value stocks have seen success as a group early in 2025, and EFV bets that these trends will continue, at least outside of the United States and Canada.
A key draw of EFV is its wide reach. The fund's nearly 450 holdings are tilted toward financials (about 34% of the portfolio as of February 28), but all sectors are represented. Similarly, though Japan, the United Kingdom, and France are the countries best represented in EFV's basket of stocks, companies from more than a dozen nations are included.
Many of the names in EFV's portfolio also maintain high dividend yields, and the fund itself has an annual dividend yield of 4.29%, giving investors a key added bonus of regular passive income. As of March 3, EFV has surged by about 11% so far in 2025, while the S&P 500 is down 0.3% over the same period.
Low-Cost Global Exposure, Solid 2025 Returns
Investors seeking an ETF similar to EFV above but with a broader basket and a lower expense ratio might consider the SPDR S&P World ex-US ETF (NYSEARCA: SPDW).
[content-module:CompanyOverview|NYSEARCA:SPDW]While EFV's annual fee will cost investors 0.33%, SPDW's is a mere 0.03%, making it one of the least expensive ETFs available.
Further, SPDW's investment mandate is exceptionally wide—the fund holds a huge portfolio of large-cap developed international equities outside the United States. With extensive exposure to nearly 5,000 stocks, SPDW remains broadly diversified without a distinct geographic or sector focus.
However, it makes an excellent play when global markets are thriving, and the U.S. may be struggling—or for investors simply looking to rebalance their portfolio away from a common U.S. tilt. SPDW's strategy is paying off so far this year, with returns of nearly 8% so far as of March 3.
Modest Assets Don't Interfere With Stable Holdings, High Dividend Yield
Unlike the funds above, the iShares Core High Dividend ETF (NYSEARCA: HDV) does focus on U.S. equities—specifically, on dividend-paying large-caps that show signs of being undervalued.
[content-module:CompanyOverview|NYSEARCA:HDV]The 76 companies in HDV's portfolio include household names like Johnson & Johnson (NYSE: JNJ) and Procter & Gamble Co. (NYSE: PG).
Companies like these are incredibly well established, likely to continue to see strong business even in the face of challenging external economic conditions, and appealing to investors for their history of dividend payments.
HDV sports a fairly high annual dividend yield of 3.44%. The stable status of the individual stocks making up HDV's portfolio means the fund has also fared well so far in 2025 despite uncertainty in the market. HDV is up more than 7% year-to-date as of March 3. What's more, its low expense ratio of 0.08% makes it competitive with many other dividend funds. It's surprising, then, that HDV has an AUM of just $11 billion, making it the smallest fund on this list based on asset base.
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