By Ian Salisbury

April was a wild month for the stock market. Investors who ignored volatility and stayed invested came out winners.

Just look at Morningstar's April report on the market's 10 largest U.S. stock ETFs, seven of which are from investing giant Vanguard. While Morningstar issues the report monthly, the latest version encapsulates one of the most volatile periods in memory, when stocks plunged more than 10% in a matter of days as President Donald Trump asserted his aggressive tariff plans, only to snap back almost as quickly the White House relented.

The top April performer was Vanguard FTSE Developed Markets ETF, which returned 4.2% during the month. The fund has continued to shine, with a 1.7% return in the past week. Overall it's up nearly 13% year to date.

Foreign stocks have lagged behind U.S. counterparts for years, but this year they have reversed the script as investors bet President Donald Trump's trade war could tip the U.S. economy into a recession. At the same time White House demands that European allies up defense spending have kindled hopes that governments in Germany and elsewhere would borrow and spend more, stimulating growth.

Germany's political situation was thrown into turmoil Tuesday when new Chancellor Friedrich Mertz took two votes to confirm his post. The Dax index of German stocks closed down 0.4%.

A weakening dollar has also played a big role in boosting performance for Vanguard Developed Markets and other international stock funds. The greenback sold off sharply, following Trump's saber rattling and hasn't snapped back like U.S. stocks. Year to date, the WSJ Dollar Index is down more than 6.5%. A weaker dollar can translate directly into price gains for U.S. holders of foreign stocks -- profits earned locally are worth more when translated back into dollars.

The fact that foreign stocks rallied, while U.S. stocks struggled, should count as a win for diversification. A separate Morningstar list of the 10 largest bond funds, showed nine of out of 10 also rallied last month. The largest and broadest, Vanguard Total Bond Market ETF gained 0.4%. The only loser was iShares 20+ Year Treasury Bond ETF, which posted a 1.4% loss.

One potential diversification caveat: Many investors may not have benefited from foreign stock rally as much as they could have. While foreign stocks represent about 37% of global market capitalization, many investors exhibit "home country bias," overweighting U.S. stocks relative to foreign ones. The typical Fidelity 401(k) holds more than $7 in U.S. stocks for every $1 in foreign stocks, according to MarketWatch.

While foreign stocks rallied in April, most U.S. stock funds on Morningstar's list posted losses. The biggest loser was the Vanguard Value ETF, which saw a 3.5% decline on the month. But Vanguard Total Stock Market ETF, the largest fund with $1.7 trillion in assets, was down 0.7%. Three S&P 500 index funds delivered essentially identical results.

Still, there is a lesson for investors here too. The relatively small calendar month declines conceals a lot of gut-wrenching market chaos. The S&P 500 plunged 12% in the four days following the April 2 "Liberation Day" tariff announcement before President Donald Trump relented and announced a pause. After the market gained its footing it finished April with a seven-day winning streak, its biggest in more than five years.

On Thursday it closed down just 0.4% below its level on April 2, essentially erasing all of its April losses. In other words, investors who managed to tune out the headlines, and hang on through the chaos did just fine.

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 07, 2025 01:30 ET (05:30 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.