The second quarter of 2025 has been marked by sharp volatility in U.S. equity markets, triggered by aggressive tariff measures from President Trump and mounting geopolitical tensions. Despite the turbulence, the S&P 500 is hovering around its all-time high—a remarkable turnaround given that the index was on the verge of a bear market just two months ago.
The S&P 500 flirted with bear market territory in April, wiping out nearly $9.8 trillion in market value. However, May and June brought a robust recovery. The S&P 500 index climbed 6.15% in May, its best monthly performance since November 2023 and its strongest May since 1990. It has added about another 3% in June, recovering trillions in lost market capitalization.
The S&P 500 gained 10% over the past three months, the Dow Jones Industrial Average rose a more modest 4.3% while the Nasdaq Composite Index surged 13.3% during that time frame. Tech’s dominance played a key role in this divergence, as investors turned to the high-growth names.
Investor optimism surged as tech and AI stocks staged a strong comeback. Mega-cap leaders like NVIDIA and Microsoft led the charge, driving the Nasdaq 100 to a new all-time high—its first since February. Despite ongoing geopolitical volatility and still-high interest rates, these tech giants are increasingly viewed as a modern-day safe haven.
While Trump’s tariff policy remains aggressive—with average tariff levels now at a 90-year high—he has recently adopted a more measured tone. Deals with the UK and a tentative truce with China have helped calm investor nerves, suggesting the worst may be over.
Adding to the positive tone, hopes for de-escalation in the Israel-Iran conflict have buoyed investor sentiment. The easing of global tensions helped reduce risk-off positioning, further supporting the stock market rebound.
Against this backdrop, below we highlight a few winning ETF areas of the second quarter 2025.
Korea Defense Industry
PLUS Korea Defense Industry Index ETF KDEF – Up 56.91%
The underlying Korea Defense Industry Index is designed to track the performance of South Korean companies that have demonstrated high relevance to defense. The fund charges 65 bps in fees.
Korean defense stocks have seen a surge over the past year, as the companies secured a number of major international contracts to export their defense systems.
Crypto
First Trust SkyBridge Crypto Industry and Digital CRPT – Up 54.30%
