Navigating Volatility with IWLG: How Active Management Shields Investors in Uncertain Markets

In the first quarter of 2025, global markets faced a perfect storm of macroeconomic uncertainty. The U.S. administration's aggressive tariff proposals, China's AI-driven disruptions, and shifting investor sentiment created a volatile backdrop for equity investors. Amid this turbulence, the NYLI Winslow Large Cap Growth ETF (IWLG) emerged as a standout performer, demonstrating how strategic diversification and active management can shield portfolios from top-heavy index risks. This article explores IWLG's Q1 2025 results, its disciplined sector allocations, and its potential as a defensive play in uncertain markets.

Outperformance Through Active Sector Allocation

The Q1 2025 quarter saw a dramatic reversal of 2024's momentum-driven market, with Value, Quality, and Yield factors surging as investors prioritized stability over growth narratives. IWLG's focus on these attributes—combined with reduced exposure to the IT sector—propelled it to outperform its benchmark, the Russell 1000 Growth Index, which fell -4.8% during the quarter.

IWLG's success hinged on its sector-agnostic strategy, emphasizing companies with strong dividends, stable earnings, and defensive characteristics. While the Russell 1000 Growth Index suffered from its concentration in volatile sectors like Technology and Communication Services, IWLG's portfolio leaned into sectors like Consumer Staples, Energy, and Financials, which thrived amid the shift to defensive assets.

Reduced IT Exposure: A Shield Against AI Volatility

The IT sector, a traditional cornerstone of growth indices, faced significant headwinds in Q1 2025. The launch of DeepSeek AI and tariff-related disruptions to global supply chains triggered a -18% peak-to-trough decline in the S&P 500. IWLG's reduced IT allocation—relative to the Russell 1000 Growth Index—protected it from this sector's volatility.

By contrast, IWLG's top performers included:
- Coca-Cola Co (+15.88% Q1) and Philip Morris International (+33.1% Q1) in Consumer Staples,
- Chevron Corp (+16.8% Q1) in Energy, and
- Berkshire Hathaway Inc (+17.5% Q1) in Financials.

This sector focus aligns with IWLG's active management philosophy, which avoids passive exposure to overvalued or cyclical sectors. The Russell 1000 Growth Index, by contrast, carries a 20% mid-cap tilt and higher IT concentration, making it vulnerable to the “winner-takes-all” volatility of tech stocks.

Geopolitical Risks and the Case for Global Diversification

The Q1 2025 quarter underscored the dangers of U.S.-centric investing. While the S&P 500 fell -5%, European equities surged +9.4%, and Chinese stocks (MSCI China Index) rose +15%. IWLG's flexible regional exposure—prioritizing high-yield European firms like Allianz SE (+24% Q1) and Canadian Energy stocks like Wheaton Precious Metals (+37.9% Q1)—allowed it to capitalize on these shifts.

This global diversification contrasts sharply with passive benchmarks like the S&P 500, which allocate 90%+ to U.S. equities. In an era of trade wars and diverging global growth rates, IWLG's ability to shift capital across regions and sectors becomes a critical risk-mitigation tool.

Valuation and Risk Metrics: A Disciplined Edge

IWLG's 4.1% free cash flow (FCF) yield—outpacing the MSCI World Index's 3.9%—reflects its focus on companies with sustainable earnings. This metric, coupled with its Quality upgrades (e.g., The New York Times and Booking Holdings), positions IWLG to outperform in low-growth environments.

Meanwhile, the fund's shorter-dated bond allocations insulated it from interest-rate volatility, a stark contrast to passive ETFs tied to long-duration Treasuries.

Investment Thesis: Reallocate to IWLG for Defensive Growth

For investors seeking growth without overexposure to U.S. tech or tariff-sensitive sectors, IWLG offers a compelling alternative:
1. Sector Resilience: Reduced IT exposure and overweight in defensive sectors like Energy and Healthcare.
2. Global Diversification: Exposure to high-yield European and Canadian equities buffers against U.S. macro risks.
3. Active Management: The team's focus on Quality, Yield, and Value aligns with the market's defensive pivot.

Conclusion

The Q1 2025 results reaffirm that passive index-tracking strategies are poorly suited to volatile, geopolitical-driven markets. IWLG's success—rooted in disciplined sector allocation, global diversification, and active management—provides a blueprint for investors seeking growth without overexposure to risk. In an era of trade wars and AI disruptions, reallocating to IWLG could be a prudent hedge against the instability of top-heavy benchmarks.

Consider this: In a world where tariffs and tech volatility dominate headlines, is your portfolio built to withstand the storm?