A measure of expected volatility soared to its highest level in three months on Friday, the latest sign of increasing fears among investors. The index ticked up as investors turned cautious over tepid global growth and decline in oil prices.

Investors are also increasingly edgy over the referendum, which is slated later this month, on whether U.K. should stay in the European Union. The decision by the Federal Reserve and Bank of Japan (BOJ) on monetary policies this week is also expected to escalate market turbulence. In this heat of uncertainty, investing in fundamentally solid, low-beta stocks will be a prudent choice. Such stocks are usually unperturbed by market gyrations.

Volatility Spikes, Indexes Fail to Reach New Highs

Global growth woes and drop in oil prices weighed on the U.S. stock market on Friday, with the S&P 500 failing to hold above the 2,100 level for the first time in a week. The Wall Street’s fear gauge index experienced a jolt, thanks to the aforesaid developments. Investors scooped up safe haven assets like debts, sending sovereign bond yields across the globe down.

The VIX index, a barometer of expected volatility of the S&P 500 index over the next 30 days, climbed 16.3% to touch a three-month high of 17.03 on Friday. The index also recorded its largest weekly advance in five months, surging 26%. Add to this, a series of economic events with uncertain outcomes this month and we all know that volatility is not going to end soon.

“Brexit” Stokes Fear

Anxiety over a possible exit of the U.K. from the European Union has heightened volatility in the markets. In fact, the risk of a so-called “Brexit” has intensified after fresh polls. Last weekend, an opinion poll by Opinium showed that 52% of the Brits prefer to leave the world’s biggest single market, while 33% are in favor of not leaving. Another poll by the Independent showed that 55% of those surveyed believed Britain should leave the European Union, while 45% wanted to stay in.

On Sunday, British Prime Minister David Cameron in an interview with the Observer cautioned that a potential Brexit will adversely affect British spending on healthcare. While saying so, he was citing a research by the Institute of Fiscal Studies and the National Institute for Economic and Social Policy. He forewarned that Brexit will dry up around 40 billion pounds in U.K. public finances by 2020. U.K.’s campaign to leave the bloc will be decided in a vote on Jun 23.

FED & BOJ to Spur Instability

This week, two central banks’ decisions on monetary policy are also apprehended to spark bouts of volatility. Thanks to May’s lower-than-expected nonfarm payroll number, odds of a rate hike this month are low. This data has raised doubts over the health of the economy.  In the buildup to the June meeting, many Fed officials have made dovish comments. Fed Chair Janet Yellen has, however, stuck to a positive note insisting that the Fed should hike rates. But, she hasn’t given a definite time frame.

On the other hand, foreign investors are pulling money out of Japanese stocks as they doubt “Abenomics.” Despite more than three years of monetary stimulus, Japan failed to come out of two decades of economic stagnation. Foreign investors have sold about 4.5 trillion yen in Japanese cash equities from January through May. Weak external trade and listless consumption added to the anguish. All eyes are now on BOJ’s monetary policy decision. Volatility had spiked at the beginning of the year, when the BOJ surprisingly adopted negative interest rates to beat deflation.

Beat Volatility with 5 Low-Beta Stocks

While tepid global growth and drop in oil prices weighed on the broader indexes and triggered market turbulence, a series of looming events are also expected to make investors cautious.  A possible exit of Britain from the European Union along with the Fed’s and BOJ’s monetary policy decisions is expected to spur volatility.

With a lot of uncertainty ahead, investors should buy such stocks that are less exposed to market downturns. The best way to do so is by investing in low-beta stocks. Such stocks have a beta of less than 1 suggesting that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market they are also less risky.

Moreover, we have made sure to select low-beta stocks that are fundamentally sound. These stocks possess a Zacks Rank #1 (Strong Buy). Additionally, we have narrowed down our search with a VGM score of ‘A’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners.

World Point Terminals, LP develops and acquires terminals and other assets for the storage of light refined products, heavy refined products, and crude oil in the East Coast, Gulf Coast and Midwest regions of the U.S. WPT is headquartered in St. Louis, MI. WPT has a beta of 0.25.

Magellan Health, Inc. engages in the healthcare management business in the U.S. The healthcare segment is involved in the management of behavioral healthcare services and employee assistance program services. MGLN is based in Scottsdale, AZ. MGLN has a beta of 0.46.

Dean Foods Company , a food and beverage company, processes and distributes milk and other dairy products in the U.S. DF is headquartered in Dallas, TX. DF has a beta of 0.55.

PharMerica Corporation operates as an institutional pharmacy services company in the U.S. PMC offers services to healthcare facilities. PMC is headquartered in Louisville, KY. PMC has a beta of 0.65.

Dave & Buster's Entertainment, Inc. (PLAY Quick QuotePLAY - Free Report) owns and operates entertainment and dining venues for adults and families in North America. PLAY is headquartered in Dallas, TX. PLAY has a beta of 0.73.

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