Global tensions are heating up following the surprise U.S. air strikes on Syria last week in retaliation of a chemical weapons attack that killed about 100 civilians. This was the first direct American assault on the Syrian Government.

The attack has fueled tensions with Russia and Iran, which backed Syrian President Bashar al-Assad, as well as North Korea. Trump signaled new sanctions that would soon hit.

Inside the Tensions

The air strike has dealt a major blow to relations between Moscow and Washington. Moscow suspended an agreement to minimize the risk of in-flight incidents between U.S. and Russian aircraft operating over Syria. This could lead to a possible U.S.-Russia war.

Also, Iran accused the White House for violating international law and siding with the Islamic State. As a result, it increased military support for President Bashar al-Assad’s regime. Both Russia and Iran pledged to hit back the U.S. with extremely serious consequences against further American military actions.

North Korea, a key ally of Syria, called Trump’s missile strike on a Syrian airbase 'an unforgivable act of aggression’ that justifies its decision to strengthen their nuclear weapons to protect the country against such wild moves by Washington. Amid concerns over North Korea advancing its nuclear weapons program, a U.S. navy strike group has diverted to the western Pacific Ocean near the Korean peninsula.

Amid signs of flared-up global tension, investors should protect their portfolio with low volatility ETFs. This is because these products have the potential to outpace the broader market providing significant protection to the portfolio. These funds include more stable stocks that have experienced the least price movement in their portfolio. Further, these allocate more to defensive sectors that usually have a higher distribution yield than the broader markets.

As such, we have presented three ETFs that could be solid options for investors in the current choppy market.

iShares Edge MSCI Min Vol USA ETF (USMV - Free Report)

This fund offers exposure to 183 U.S. stocks having lower volatility characteristics than the broader U.S. equity market by tracking the MSCI USA Minimum Volatility Index. It is well spread across a number of securities with none holding more than 1.50% of assets. From a sector look, health care, information technology, consumer staples, and financials take the top four spots with a double-digit allocation each. With AUM of $12.4 billion, the product charges 0.15% in expense ratio and trades in solid average daily volume of 2.5 million shares. It has a Zacks ETF Rank of 2 or ‘Buy’ rating with a Medium risk outlook.

PowerShares S&P 500 Low Volatility Portfolio (SPLV - Free Report)

This ETF provides exposure to stocks with the lowest realized volatility over the past 12 months. It tracks the S&P 500 Low Volatility Index and holds 100 securities in its basket with none accounting for more than 1.45% of assets. Utilities, consumer staples, industrials and financials make up the top four sectors with a double-digit allocation each. SPLV has amassed $6.4 billion in its asset base and trades in heavy volume of more than 2.1 million shares a day on average. It charges 25 bps in annual fees and has a Zacks ETF Rank of 2 with a Medium risk outlook.

iShares Edge MSCI Min Vol Global ETF (ACWV - Free Report)

This product offers exposure to global stocks that have lower volatility characteristics relative to the broader developed and emerging equity markets. Holding 359 stocks in its basket, it is well diversified with each accounting for less than 1.5%. Financials, health care, consumer staples, and information technology are the tops sectors with a double-digit allocation each. American firms dominate the fund’s portfolio at 56.6% followed by Japan (12.7%). ACWV has AUM of over $3 billion and average trading volume of nearly 247,000 shares. It charges 20 bps in annual fees from investors.  

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Bottom Line

Investors should note that these funds have outpaced the broad market funds albeit by a thin margin. The trend is likely to continue amid an embittered U.S.-Russia relationship and intensifying geopolitical tensions.