Let’s face it: The market is temperamental, but exchange traded funds (ETFs) can be at your rescue.

Since the Federal Reserve slashed short-term interest rates in an attempt to rescue the economy, the market and investors have received a second chance. In other words, that bull might have gotten a second wind, reports Paul J. Lim for CNN Money. However, more turbulence is unavoidable. Now it’s time to position your portfolio so that emotions won’t play a role in the event of another downturn. Lim offers these suggestions to consider:

• Change the types of stocks you own, not the amounts.
  Shifting to more stable investments such as big, domestic stocks and blue-chip companies can keep things smoother. The average investor is likely overweighted in emerging markets and small-cap stocks, and while these are great when times are good, they’re really bad when the markets are bad.
• Change the type of stocks you own,  and invest in those less risky.
  Dividend-paying funds have fallen about a third less than those funds that don’t since 2002. One option to consider is the iShares Dow Jones Select Dividend Index ETF (DVY). It invests in stocks that not only pay dividends, but that haven’t cut payouts in the past five years.
• Reduce overall exposure to equities.
  This can help you sleep better if the market dips. However, you also can lose out on larger gains. For example, by going from an aggressive 80% stock/20% bond portfolio to a 60-to-40 mix, your worst short-term losses would have been cut in half over the past 10 years. This option might not be for everyone, but it is another avenue to consider.

Tags: Dividend ETFs, Federal Reserve