ETFs for Turbulent Times: Protect Your Money and Keep Growing

Many portfolios are currently in the red. In times like these, it’s worth looking at strategies that can reduce volatility without sacrificing long-term growth. Two ETF approaches are gaining particular attention: low volatility and multi-factor. Here’s how they work—and when they might make sense.

Is your portfolio in the red for weeks now? You’re not alone.

Markets remain turbulent. Within a month, the S&P 500 has dropped by around 6.5%, while Swiss stocks declined slightly less at about –4.97% (data from Investing.com, March 30, 2026). At the same time, uncertainty has risen significantly: the volatility index (VIX) increased by about 31% over the same period.

There’s currently no clear end in sight. Rising oil prices are weighing on economic outlooks, many forecasts have been revised downward, and inflation is back in focus—along with expectations of further interest rate hikes.

Rising rates, geopolitical tensions, and volatile markets are causing many investors to question their strategy.

And that’s exactly when the most expensive mistakes happen: reallocating, exiting, waiting.

One question I’m often asked in webinars right now is:
How do I structure my portfolio so it works even in turbulent times?

Two ETF approaches that are becoming increasingly relevant in this context are low volatility ETFs and multi-factor ETFs. While they take different approaches, both aim to improve the risk-return profile and offer a degree of “protection” against losses.

Used correctly, they can help stabilize your portfolio while still enabling long-term growth.

What are Smart Beta strategies?

Both low volatility and multi-factor ETFs fall under smart beta strategies. But what does that mean?

Traditional ETFs typically track well-known indices like the S&P 500 or MSCI World. Companies are usually weighted by market capitalization—the larger the company, the bigger its share in the index.

Smart beta strategies take a different approach. They still invest systematically and rule-based, but instead of weighting only by size, they use specific criteria—called factors.

These factors are characteristics of stocks that have been studied in financial research for decades and are historically associated with higher or more stable returns.

Key factors include:

• Value → undervalued companies
• Quality → financially strong companies with solid balance sheets
• Momentum → stocks with strong upward trends
• Low volatility → stocks with smaller price fluctuations
• Size → smaller companies with long-term growth potential

The advantage: weighting isn’t driven solely by company size. Smart beta ETFs can therefore offer different portfolio characteristics, such as lower volatility or targeted exposure to specific return drivers.

With smart beta, you’re deliberately choosing a different way to capture the market—not just passively replicating it.

What to keep in mind

Smart beta is not a guarantee of better returns:

• Factors don’t always work at the same time
• Underperformance vs. the broader market is possible
• Methodologies vary significantly between providers

Low Volatility ETFs: Reducing losses is the goal

Low volatility ETFs aim to reduce fluctuations and limit losses by investing in stocks that historically show lower price swings than the overall market.

They can be constructed in different ways:

• Selecting companies with low historical volatility (often defensive sectors like utilities, consumer staples, healthcare)
• Optimizing portfolios based on correlations between stocks to minimize overall volatility

Stability comes at a cost

Data shows a clear pattern:

During crises, low-volatility ETFs often fall significantly less.
For example, during last year’s market reaction to tariff announcements, an MSCI World ETF dropped around –20%, while the MSCI World Minimum Volatility Index fell only about –9.6% (source: justETF).

However, in strong bull markets, they usually lag behind.

Between December 30, 2012, and January 6, 2026:

• MSCI World: ~12.45% annual return
• MSCI World Minimum Volatility: ~9.34%

Limitations

• Loss reduction is not guaranteed
• Sector bias toward defensive industries
• Sensitivity to interest rates
• Based on historical data (not predictive)

Multi-Factor ETFs: Rethinking diversification

While low volatility focuses on one factor, multi-factor ETFs combine several, such as:

• Value
• Momentum
• Quality

The goal isn’t just stability—but more robust risk-adjusted returns across different market environments.

Why? Because different factors perform well in different conditions:

• Value often rebounds after crises
• Momentum thrives in strong trends
• Quality performs well in uncertain times
• Low volatility helps during downturns

Since market phases are hard to predict, combining factors reduces reliance on any single one.

Different constructions

Multi-factor ETFs vary widely:

• Some require stocks to meet multiple criteria
• Others allocate separately to different factors

These differences can significantly impact risk, return, and sector exposure.

Performance insights

• Potential for slightly higher risk-adjusted returns
• Lower volatility than single-factor strategies
• Often smaller drawdowns than traditional indices

But:

• Outperformance is not guaranteed
• Multiple factors can underperform simultaneously

How to use these ETFs

The right approach depends on your goals:

• Low volatility ETFs → reduce swings and limit losses
• Multi-factor ETFs → improve diversification and risk-return balance

They can be especially useful if:

• You want to invest but reduce volatility
• Your investment horizon is shorter than 10+ years
• You don’t want full exposure to market swings

They may also be helpful during the withdrawal phase, for retirement funds or money earmarked for large purchases.

How to integrate them into your portfolio

You can use them:

• As a core holding
• Or as a satellite allocation

A typical allocation might be 20–40% of your equity portfolio, depending on your risk tolerance and goals.

Key things to watch

• Choose ETFs based on your investment goals
• Pay attention to costs (often higher than standard ETFs)
• Returns may lag in strong markets (especially low volatility)
• Check for overlaps with existing holdings

Bottom line:
These strategies won’t eliminate risk—but they can help you build a portfolio that doesn’t just perform in good times, but also holds up when markets get rough.