Tariff News Pushing Portfolios Down? Add Active ETF Flexibility

A new post by the president regarding tariffs has once again impacted markets. 2025 as a whole has been repeatedly beset by tariff news often out of the blue, negatively affecting portfolios. For many investors, that has created numerous opportunities. But for as many others, it has created headwinds. Adapting to repeated policy shifts could take a toll on portfolios and investors, but active ETFs can help.

See more: Invest in Inflation-Sensitive Stocks in Active ETF TURF

Where passive funds must follow strict guidelines and sometimes obtuse processes to adapt to tariff news, active ETFs can adapt more quickly. Active ETFs do not have to maintain strict allocations like passive funds. Often cap-weighted, those passive funds track indexes that may have to just pick the 10 largest firms in a given segment or market and hold. Active ETFs, by contrast, often employ bottom-up, fundamental research-driven approaches that find companies prepared to weather headwinds. or even take advantage of market dislocations.

Tariff News May Invite Fresh Look at Active

If, for example, one were to compare two different international equity funds, the difference appears stark. A passive international equity fund may be obliged to tightly follow its market-cap approach. That could give it a bias toward developed markets and away from, for example, smaller firms offering a high degree of upside. An active ETF would offer more freedom to invest across categories and market caps.

Especially amid potential high tariff news, that strategy could really help. Tariffs could raise input costs for all kinds of companies, making it important to identify firms with strong cash flows and capability to withstand those challenges. What’s more, with many investors facing some notable tax bills this year and looking to tax-loss harvest, now could be the time to swap equity allocations into the active ETF wrapper. 

Will Friday’s tariff news augur further tariffs? Putting aside the Supreme Court’s case on the legality of the recent tariffs, it’s hard to predict. Whether tariffs are part of long-term macroeconomic policy or a bargaining chip, investors may want to consider options. Adding active ETF exposure either in a core or core-plus role for portfolios may be one particularly appealing option.

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