Recent announcements by President Donald Trump regarding global trade tariffs have contributed to increased volatility in stock markets. Exports entering the American economy are expected to be subject to tariffs of 10% or more, prompting measures from other nations and raising concerns of a potential for broader trade dispute, inflationary pressure, and a possible economic slowdown. 

This is, of course, may be not good for the stock markets because they are closely linked to economic growth expectations. Perhaps understandably, investors trying not to get caught in the uncertain market, have been selling their stock holdings en masse, resulting in significant declines in major indices recently.  

Global Stock Market Losses as of 7 April 2025 ^[1]: 

• S&P 500: Fell nearly 6% 

• Nasdaq: Dropped 5% 

• FTSE 100: Dropped almost 5%, hitting a 5-year low 

In Asia: 

• Nikkei 225 (Japan): Down 7.8% 

• Kospi (South Korea): Fell 5.6% 

• ASX 200 (Australia): Lost 4.2% 

• Hang Seng Index (Hong Kong): Dropped as much as 12.5% during trading 

To put things in perspective: The S&P 500 alone had lost as much as US $5 trillion in two days of sell-offs following tariff announcements ^[2].  

While it’s difficult to know for certain where the capital has gone, analysts suggest that some of it may have been redirected into traditionally recognised “safe haven” assets.  

What are safe haven assets? 

“Safe haven” assets are assets that have historically held – or even increased – their value during market downturns or economic uncertainty. Some investors turn to safe haven assets as part of their strategy to manage their portfolio risk against uncertainty and potentially limit their losses.  

“Safe haven” assets can come in different forms, ranging from stocks and ETFs, to precious metals such as gold, stable currencies and high-quality bonds. We’ll discuss more in detail later on.  

Despite belonging to different asset classes, “safe haven” assets share some common characteristics, such as: 

• Being relatively low correlation or negatively correlated with the broader economy, which means their value tends to move independently or opposite to prevailing price trends.  

• Having limited supply, which can help preserve value over time and making them more resistant to inflation or devaluation. 

• Enjoying a consistent level of demand that endures throughout different economic conditions. 

• Having permanence (i.e. physical or economic durability), which means they are not easily destroyed or replaced.  

While historically regarded as more resilient in times of market stress, no asset is entirely risk-free. Past performance is not a reliable indicator of future results. 

Why trade “safe haven” assets? 

One reasons some investors choose to trade “safe haven” assets is to hedge your portfolio and manage risk during periods of market uncertainty.  

This is possible because “safe haven” assets historically tend to show lower correlation with  macroeconomic cycles, holding on to or even increasing their value when other assets are at risk of falling. Some investors use “safe haven” assets as part of a broader diversification strategy, given their tendency to behave differently from other assets during downturns. 

Additionally, many “safe haven” assets also offer dynamic price action of their own, which means traders can find potential trading opportunities in this volatility. Such opportunities tend to be heightened when investors seeking safety start turning their attention to “safe haven” stocks; the increased demand may introduce upwards pressure on prices.  

When are “safe haven” assets popular? 

“Safe haven” assets often attract increased attention during periods of heightened market volatility or during potential market corrections. Seeking to avoid the psychological pain of seeing their holdings fall in value, investors sell off their falling holdings to buy into assets that hold their value. Investors may seek perceived stability by reallocating capital away from risk-sensitive assets toward those viewed as more resilient. 

This transfer of capital to “safe haven” assets can be amplified during times of elevated uncertainty, especially when news headlines generate caution among traders, who are then tempted to get out of the falling markets faster. While demand for “safe haven” assets may rise in such periods, their performance is still subject to broader market conditions and is not guaranteed. 

Popular “safe haven” assets to watch 

Gold 

Gold has long been considered a potential “safe haven” assets. Due to its scarcity, limited quantity, and other unique properties, it is widely regarded as a store of value.  

Gold is popular not only among retail investors, but also institutional investors and central banks. In 2024, continued global uncertainty and high inflation prompted central banks to extend their continued gold accumulation, with gold purchases by central banks exceeding 1,000t for the third year in a row. Meanwhile, annual investment in gold jumped 25% to 1,180t, a four-year high ^[3]. 

Some analysts, such as Goldman Sachs, have projected a potential increase in gold prices of up to 8% in 2025 ^[4].  Meanwhile HSBC has revised its gold price outlook for 2025 and 2026 to be USD $3,015 and USD $2,915 per ounce respectively ^[5]. It is important to note that price forecasts are inherently uncertain and reflect the views of the respective institutions at a specific point in time. Forecasts are speculative in nature, and are subject to significant change, and should not be relied upon as a basis for trading decisions. 

Defensive stocks and ETFs 

Recall that one of the key characteristics of a “safe haven” asset is that it continues to enjoy consistent demand even during a market downturn.  

Certain stocks have been found to demonstrate this characteristic. Often referred to as  defensive stocks, these stocks tend to provide a relatively stable dividend yield, earnings and cash flow, regardless of economic cycles or external events that are happening.  

While no stock is immune to volatility, for defensive stocks, their share prices may be less sensitive  in spite of high volatility or uncertainty in the broader economy. This is due to inelasticity of demand in their products and services. Think about supermarkets, for instance; even if prices increase, there is no significant impact on demand, as consumers still need to continue buying groceries and other everyday essentials.  

Some examples of sectors that may include defensive stocks are: 

• Consumer staples, such as food and beverage brands, supermarkets, household and personal care products. 

• Healthcare, including pharmaceuticals, vaccine manufacturers, biotechnology and life sciences, and medical device manufacturers. 

• Communication services, such as telephone and broadband providers, 5G and WiFi operators, and media and advertising companies 

• Utilities services, including power, gas and water, independent power producers etc.  

By the same token, investors may also make use of defensive ETFs to assist their management of market risks. These are investment funds that track baskets of leading defensive stocks. Some examples of commonly referenced defensive ETFs include: 

• iShares Edge MSCI Min Vol USA ETF (USMV). This fund focuses on equities with the lowest volatility,. 

• Fidelity MSCI Utilities ETF (FUTY), a fund with two of its largest holdings – NextEra Energy (NEE) and Duke Energy (DUK) — collectively providing electricity to millions of Americans. 

• Vanguard Consumer Staples ETF (VDC). This ETF tracks popular defensive stocks with an emphasis on consumer goods instead of utilities.  

Note that these are commonly cited ETFs within the broader market, not recommendations to trade. Please conduct your own research or seek independent advice. 

AAA-rated government bonds  

Government bonds are loans that typically offer a fixed interest payments throughout the tenure of the loan. They are widely considered to be lower-risk investments, , especially bonds issued by stable governments with healthy economies, strong credit ratings and sound fiscal management. 

During market volatility, investors may turn to bonds for their low volatility. In most cases, the principal sum invested will be paid back at maturity, which can provide greater predictability of returns — although this is subject to the creditworthiness of the issuer.  

Furthermore, bonds generally share an inverse relationship with interest rates. In a slowing economy, governments may reduce interest rates to stimulate economic growth. As the interest bonds pay is directly tied to interest rates, this means newly issued bonds making bonds offer a smaller yield than older bonds, making the existing bonds with higher fixed rates more attractive. However, it is also important to note that while AAA-rated government bonds are considered lower risk, they are not entirely without risk, and returns are not guaranteed. 

Selected currencies  

Currencies that have strong liquidity, relatively low inflation, and stable political systems are sometimes viewed as “safe havens” during economic downturns.  

Traditionally, one of the more common “safe haven” currencies is the US Dollar, due to the currency’s status as the world’s reserve currency, and the dominance of the American economy. However, given the potential of shifts in global trade policy, the US Dollar could see heightened volatility that would derail its safe haven status, at least for the time being.  

Other commonly referenced “safe haven” currencies investors can consider are as follow:  

One is the Swiss franc (CHF), backed by Switzerland’s long standing policy of political neutrality and fiscal prudence, enhanced by the Swiss National Bank’s commitment to maintaining currency stability.  

Alternatively, the Japanese yen is also commonly referenced as a “safe haven” currency, due to Japan’s large economy and financial market liquidity. Despite its high public debt levels, the yen benefits from Japan’s current account surplus, which provides support during economic downturns. 

Kindly note that the examples listed above are not investment recommendations. Past performance is not a reliable indicator of future results. 

Tips for trading “safe haven” assets 

Understand the market  

Despite their status as “safe havens”, these assets can still experience volatility, sometimes moving in unexpected ways. Be sure to study and understand the market before trading your selected safe haven asset.  

Choose an appropriate entry point 

One important point to note about “safe haven” assets is that if you wait too long, you may risk entering the market when prices are overvalued. This is because as economic downturns worsen, “safe haven” assets prices tend to be pushed up as more investors buy into them.  

Thus, it is important to set realistic price targets, and using appropriate risk management tools such as stop-losses and take-profits at appropriate levels to help mitigate risk.  

Take a long-term view 

Don’t be tempted to go all in, avoid making reactive decisions based on short-term market moves. Bear in mind that market corrections are par for the course, For investors with longer-term goals, it may be more appropriate to review allocation strategies periodically. Past performance is not a reliable indicator of future results. 

Remember that investors inflow to “safe haven” assets may increase volatility in these markets, creating uncertainty for all. Following suit may not be the best move for everybody, and should be evaluated in the context of personal financial goals and risk tolerance; and investors with long-term goals may find themselves better served sheltering in place, allowing the market to right itself in time. This content is for informational purposes only and does not constitute investment advice. Please seek independent financial advice if you are unsure about the suitability of any investment strategy. 

Conclusion 

For those interested in learning more about portfolio diversification, “safe haven” assets are often studied due to their historical role during market downturns. Vantage offers a wide variety of CFDs such as forex pairs, stocks, ETFs and bonds for trade, including assets that are considered safe havens in light of the current trade tariffs.  

Gain exposure to price movements in “safe haven” assets without direct ownership through Vantage Contract-for-Difference (CFDs). CFDs are leveraged products that carry a high level of risk to your capital. Ensure you understand the risks involved and consider whether you can afford to take the high risk of losing your money. Vantage offers competitive spreads, low fees, and 24/5 customer support. Sign up for a live account now.  

Disclaimer: CFDs and Spreadbets are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.9% of retail investor accounts lose money when trading CFDs and Spreadbets with this provider. You should consider whether you understand how CFDs and Spreadbets work and whether you can afford to take the high risk of losing your money.   

The information has been prepared by Vantage UK as of 14 April 2025 and is subject to change thereafter. The information is provided for educational purposes only and doesn’t take into account your personal objectives, financial circumstances, or needs. It does not constitute investment advice. We encourage you to seek independent advice if necessary.  

The information has not been prepared in accordance with legal requirements designed to promote the independence of investment research. No representation or warranty is given as to the accuracy or completeness of any information contained within. This material may contain historical or past performance figures and should not be relied on. Furthermore estimates, forward-looking statements, and forecasts cannot be guaranteed. The information on this site and the products and services offered are not intended for distribution to any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.    

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