Tariffs, Tensions and Turmoil: In Turbulent Times, Boring Can Be Beautiful

June 09, 2025 EDT

Markets love clarity—but tariffs, trade tensions, and recession fears deliver the opposite.

These economic threats don’t just shake headlines—they may send shockwaves across portfolios. But not all sectors react the same way. In times of economic stress, some areas of the market tend to show resilience, while others get caught in the crossfire.

So how can investors stay invested without getting whiplash? A sector-balanced strategy, like the one used by the Stratified LargeCap Index ETF (SSPY), may offer a smoother ride.

Which Sectors Are More Resilient in Times of Trouble?

🛒 Consumer Staples – People don’t stop buying toothpaste, toilet paper, or cereal during a downturn. Companies in the consumer staples sector provide essential goods, making them less sensitive to economic cycles. In trade war scenarios, they often have more localized supply chains, which may reduce exposure to tariffs.
⚕️ Healthcare – Health needs don’t take a break during recessions. Demand for pharmaceuticals, medical devices, and services tends to remain steady. Healthcare companies often have pricing power and strong margins, helping them ride out both economic and geopolitical volatility.
⚡ Utilities – Electricity, water, and gas are non-negotiables. Utility companies tend to offer stable cash flows and dividends. When the economy falters, investors often seek out these “defensive” plays for their reliability.
📡 Communication Services – In a digital world, we don’t cancel internet or cell phone service in a downturn. While not completely immune, major players in telecom and streaming may often hold up better than cyclical industries like industrials or materials.

Which Sectors Get Hit Harder?

🏭 Industrials & Materials – These sectors are often among the first to feel the pain during a trade war or recession. Tariffs can raise input costs, and slowing global demand can weaken revenues.
🚗 Consumer Discretionary – When times get tough, people cut back on big-ticket items like cars, luxury goods, or vacations. These companies often face revenue slowdowns and shrinking margins during recessions.
💻 Technology – While tech has been a long-term growth engine, it can be vulnerable to trade tensions and export restrictions. Hardware producers and chipmakers often rely on global supply chains, making them particularly sensitive to tariffs.

When Weight Becomes a Potential Weakness

One of the potential hidden vulnerabilities of traditional S&P 500 market cap-weighted ETFs is their heavy concentration in the largest sectors—most notably technology and consumer discretionary. While these sectors can drive impressive gains in bull markets, they’re also among the most exposed during periods of tariffs, trade wars, and economic slowdowns. Tech companies often rely on complex global supply chains and international sales, making them particularly sensitive to geopolitical friction. Likewise, consumer discretionary firms face tightening wallets when recession fears rise. When these overrepresented sectors stumble, they may drag down the entire index—potentially magnifying volatility for investors who may not realize just how concentrated their exposure is.

Why a Sector-Balanced Approach May Make Sense

The S&P 500 is market cap-weighted, meaning the largest sectors and companies dominate the index. That leaves investors heavily exposed to just a few areas—especially technology.

SSPY takes a different path. It aims to equally weight each of the 11 sectors, ensuring balanced exposure across the entire economy—defensive and cyclical alike. That means no single sector dominates the performance of the fund, and investors aren’t potentially overexposed.

While flashy sectors like tech tend to steal the spotlight during bull markets, it's often the so-called "less sexy" sectors—like utilities, consumer staples, and healthcare—that may prove their worth when things get rocky. These areas may not dominate headlines, but they provide essential goods and services that people rely on regardless of economic conditions. By aiming to stay evenly invested across all sectors, investors may avoid chasing heat and instead build a more even portfolio when tariffs strike or recession fears rise. In volatile times, boring can be beautiful.

Final Thought

Economic storms are inevitable. But investors don’t have to sail through them blind. A sector-balanced strategy like SSPY may offer broad, diversified exposure across market cycles. In an unpredictable world, balance might just be the most dialed-in bet of all.

Learn More Here: Explore SSPY >>

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Investing involves risk, including loss of principal. The Funds are subject to certain other risks, including but not limited to, equity securities risk, large-capitalization risk, index tracking risk, passive strategy/index risk, and market trading risk. Investing involves risk, including possible loss of principal. There can be no guarantee the Fund will meet its investment objectives.

SSPY Risks: The Fund is subject to certain other risks, including but not limited to, equity securities risk, large-capitalization risk, index tracking risk, passive strategy/index risk, and market trading risk. Investing involves risk, including possible loss of principal.

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Stratified Weight™ is the weighting methodology by which Syntax diversifies an index’s constituent companies that share “Related Business Risks.” Related Business Risk occurs when two or more companies provide similar products and/or services or share economic relationships such as having common suppliers, customers or competitors. The process of identifying, grouping, and diversifying holdings across Related Business Risk groups within an index is called stratification, and was designed by Syntax to seek to correct for business risk concentrations that regularly occur in capitalization-weighted indices and equal-weighted indices.

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The S&P 500® Index is a market-capitalization-weighted index of the 500 leading publicly traded companies in the U.S.

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