Volatility has hit the stock market once again, making investors jittery. Fears of an aggressive rate hike by the Fed and global growth concerns have resurfaced.

In such a scenario, investors should apply some hedging techniques to their equity portfolio. While there are a number of ways to do this, volatility-hedged ETFs like iMGP DBi Managed Futures Strategy ETF (DBMF Quick QuoteDBMF - Free Report) , Amplify BlackSwan Growth & Treasury Core ETF (SWAN Quick QuoteSWAN - Free Report) , Invesco S&P 500 Downside Hedged ETF (PHDG Quick QuotePHDG - Free Report) , Aptus Drawdown Managed Equity ETF (ADME Quick QuoteADME - Free Report) and First Trust Managed Futures Strategy Fund (FMF Quick QuoteFMF - Free Report) could prove beneficial amid market uncertainty. Investors should note that these funds have the potential to stand out and outperform simple vanilla funds in case of rising volatility.

Volatility Lingers

Jerome Powell recently said that the Fed would need to keep interest rates high enough to slow the economy “for some time” to curb high inflation. While a tight monetary policy "for some time" will bring down inflation from its 40-year high, it means slower growth, a weaker job market and "some pain" for households and businesses (read: Rising Rate & Inflation-Beating ETFs at One-Month Highs).

Money market traders see an 87% chance of the Fed hiking rates by 75 basis points in this month's meeting. The Fed has raised its benchmark federal funds rate by 0.75 percentage points at each of its last two meetings to a range of 2.25% to 2.5%.

Bouts of weak economic data across the globe added to global slowdown fears. U.S. mortgage rates touched the highest level in nearly 14 years, signaling that the hot housing market is cooling rapidly. Meanwhile, economic activity in China, the world's second-largest economy, has been declining and the property sector is also suffering. Eurozone inflation for August also rose to another record high.

However, Americans are growing more optimistic about the economy amid falling oil and gasoline prices as well as easing inflation. Consumer confidence rebounded in August after three consecutive monthly declines. Additionally, the economy added 315,000 jobs in August, while the unemployment rate ticked up to 3.7% from 3.5%.

How to Play

iMGP DBi Managed Futures Strategy ETF (DBMF Quick QuoteDBMF - Free Report)

iMGP DBi Managed Futures Strategy ETF seeks long-term capital appreciation. It will employ long and short positions in derivatives, primarily futures contracts and forward contracts, across the broad asset classes of equities, fixed income, currencies and commodities.

iMGP DBi Managed Futures Strategy ETF has AUM of $628 million and charges 95 bps in annual fees. It trades in a moderate volume of 372,000 shares a day on average.

Amplify BlackSwan Growth & Treasury Core ETF (SWAN Quick QuoteSWAN - Free Report)

Amplify BlackSwan Growth & Treasury Core ETF tracks the S-Network BlackSwan Core Index, which seeks uncapped exposure to the S&P 500, while buffering against the possibility of significant losses. Approximately 90% of the ETF will be invested in U.S. Treasury securities, while around 10% will be invested in SPY LEAP Options in the form of in-the-money calls.

Amplify BlackSwan Growth & Treasury Core ETF has amassed $364.9 million and trades in an average daily volume of 90,000 shares. It charges 49 bps in annual fees.

Invesco S&P 500 Downside Hedged ETF (PHDG Quick QuotePHDG - Free Report)

Invesco S&P 500 Downside Hedged ETF is an actively managed fund that seeks to deliver positive returns in rising or falling markets that are not directly correlated to broad equity or fixed-income market returns. Invesco S&P 500 Downside Hedged ETF tries to follow the S&P 500 Dynamic VEQTOR Index, which provides broad equity market exposure with an implied volatility hedge by dynamically allocating between different asset classes: equity, volatility and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework (read: Why Low-Volatility ETFs Should Outperform in September).

Invesco S&P 500 Downside Hedged ETF has accumulated $277.4 million in its asset base and charges 40 bps in fees per year from its investors. Volume is good, exchanging 48,000 shares a day on average.

Aptus Drawdown Managed Equity ETF (ADME Quick QuoteADME - Free Report)

Aptus Drawdown Managed Equity ETF seeks capital appreciation with a focus on managing drawdown risk through hedges. The strategy typically selects 50-75 large U.S. companies based on a Yield plus Growth framework, tilting holdings to favor companies with solid fundamentals and reasonable valuations while avoiding those with negative price momentum. It has an added objective of capital protection through the use of equity and index options to reduce drawdown when U.S. equity markets are falling.

Aptus Drawdown Managed Equity ETF charges 79 bps in annual fees and has accumulated $333 million in its asset base. It trades in an average daily volume of 24,000 shares.

First Trust Managed Futures Strategy Fund (FMF Quick QuoteFMF - Free Report)

WisdomTree Managed Futures Strategy Fund seeks to achieve positive returns that are not directly correlated to broad market equity or fixed income returns by investing in a portfolio of exchange-listed futures (read: Low-Beta ETFs to Beat Market Turmoil).

First Trust Managed Futures Strategy Fund has accumulated $162.6 million and charges 96 bps in annual fees. It trades in a moderate volume of 39,000 shares a day on average.

Bottom Line

Investors can definitely shield their portfolios against volatility with the help of the above-mentioned products. These provide dynamic exposure according to the level of market volatility and are least affected by any market turmoil. So, they could prove to be great choices when it comes to offering protection against market downturns.