Navigating Market Turbulence: 5 Low-Beta ETF Options for Risk-Conscious Investors

When markets enter volatile periods, defensive investment strategies often capture investors’ attention. The current landscape—marked by geopolitical uncertainties and potential interest rate adjustments—has renewed focus on low-beta ETF solutions. These instruments offer a compelling option for those seeking portfolio stability without abandoning equity exposure entirely.

Understanding Low-Beta: The Stability Factor

Before examining specific products, it’s essential to grasp what low-beta means. Beta quantifies how a security or fund’s price movements compare to broader market benchmarks. A beta of 1.0 means price movements mirror the overall market. Values exceeding 1.0 indicate above-market volatility, while readings below 1.0 suggest dampened price swings relative to market indices.

Low-beta ETF vehicles deliver meaningful advantages during market downturns—they typically decline less sharply than broad market indices. The trade-off? During bull markets, these funds generate more modest gains compared to their higher-volatility peers. For investors prioritizing capital preservation over maximum returns, this characteristic proves valuable.

Five Defensive-Oriented ETF Solutions

Invesco S&P 500 Downside Hedged ETF (PHDG) - Beta: 0.33

This actively managed vehicle stands out as one of the lowest-beta offerings available. PHDG employs a sophisticated approach by tracking the S&P 500 Dynamic VEQTOR Index, which combines equity market exposure with built-in volatility hedging. The fund dynamically shifts capital across equities, volatility instruments, and cash positions based on market conditions.

Institutional backing has resulted in substantial asset accumulation ($380.5 million AUM). The product carries a 40 basis point annual expense ratio and maintains robust trading liquidity, with daily volume averaging 136,000 shares. This combination makes it accessible for both institutional and retail participants.

Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI) - Beta: 0.44

NUSI targets income generation without excessive volatility exposure. The fund employs a rules-based options strategy specifically designed for income-seeking investors wanting downside protection. With $868 million in assets, this vehicle demonstrates significant institutional adoption.

The 68 basis point annual fee reflects the sophisticated options overlay employed. Trading activity remains strong, with average daily volume reaching 525,000 shares, ensuring investors can enter and exit positions efficiently.

6 Meridian Small Cap Equity ETF (SIXS) - Beta: 0.56

Contrary to typical small-cap volatility stereotypes, SIXS demonstrates that focused quality screening can produce lower-beta exposure within the small-cap universe. This actively managed fund applies quantitative screening to identify financially sound companies with positive growth characteristics, then ranks candidates by beta and value metrics.

The resulting concentrated portfolio contains 87 stocks, with positions over-weighted toward names scoring high on both selection criteria. The strategy requires a 100 basis point annual fee and has accumulated $63.2 million. Trading occurs at modest daily volumes (approximately 2,000 shares), making larger positions require careful execution.

Pacer Trendpilot Fund of Funds ETF (TRND) - Beta: 0.57

TRND implements systematic trend-following mechanics across a diversified fund portfolio. The underlying index allocates exposure across three distinct configurations: 100% equity allocation, a 50/50 split between equities and short-term Treasury instruments, or 100% Treasury positioning. The allocation adjusts dynamically based on relative performance metrics and 200-day moving average comparisons.

With $66.9 million in AUM and a 77 basis point expense ratio, this trend-based approach offers diversification beyond traditional stock selection. Average daily volume of 13,000 shares provides reasonable liquidity for standard positions.

JPMorgan Equity Premium Income ETF (JEPI) - Beta: 0.64

JEPI generates current income through a dual strategy: selling covered call options on large-cap holdings and collecting stock dividends. This approach delivers monthly income distributions while maintaining equity appreciation potential.

The $6.6 billion asset base ranks it among the largest in this category, validating the income-focused strategy’s popularity. At 35 basis points annually, the fee structure proves competitive. Trading volume exceeds 1.6 million shares daily on average, providing excellent execution quality for investors of all sizes.

Evaluating the Low-Beta Strategy

These five vehicles share common characteristics: all maintain AUM exceeding $50 million (except SIXS near that threshold), providing adequate trading liquidity. The beta spectrum ranges from 0.33 to 0.64, offering progressively higher equity exposure for investors with varying risk tolerances.

Current market conditions—featuring persistent geopolitical concerns and the Federal Reserve’s potential rate-tightening cycle—have rekindled interest in defensive positioning. While earnings momentum remains robust and consumption patterns show resilience, protective strategies merit serious consideration.

Low-beta ETF structures work best for investors explicitly prioritizing capital stability. These vehicles won’t generate spectacular returns during market rallies, but they provide meaningful downside cushioning when market conditions deteriorate. The monthly income generation available through options-based strategies (NUSI, JEPI) adds another dimension for cash-flow-focused portfolios.

Investors should assess their risk tolerance, time horizon, and income requirements when selecting among these alternatives. Each product’s specific mechanics—whether employing dynamic hedging (PHDG), options overlays (NUSI, JEPI), quantitative screening (SIXS), or trend-following (TRND)—produces distinct performance characteristics across different market environments.