The U.S. markets dipped 10% in the second quarter, and investors aren’t all that happy about the dismal data on jobs, home sales, retail sales and consumer sentiment. But man believe that exchange traded funds (ETFs) may be an investor’s best bet in today’s volatile markets.

David Elan, a principal at Windward Investment Management, believes that ETFs are the best vehicle to acquire diversification across broad indexes while hedging against against increased market volatility, writes David Bogoslaw for BusinessWeek. Elan argues that ETFs provide fast access to cash for those who want to change allocations quickly.

Traditionally, ETFs track a chosen underlying benchmark index and try to reflect the market capitalization weighting within the benchmark. Over the past couple of years, the indexes have largely beaten actively managed funds. While most are still passively managed, ETFs also use weighting systems other than market cap such as revenue, dividends, or earnings in a portfolio’s make-up, which helps it beat a market-weighted index. [How to Survive Trendless Markets.]

For example, RevenueShares offers six funds that each passively track an index but rebalances once a year based on revenue weight. The funds offered hold the same stocks as their benchmarks but in varying concentrations as dependent on how low a stock’s price-to-sales ratio is. RevenueShares President Sean O’Hara points to how historic data has shown that higher stock multiples indicate lower return expectations. [Hope for ETF Investors? What History Says.]

You can find all RevenueShares ETFs by going to the ETF Analyzer and typing “RevenueShares” in the search box. Premium members can customize search criteria, including recent performance, expense ratio, dividend yield and much more.

WisdomTree provides ETFs that rebalance according to dividend weighting – the rebalancing process lowers the valuation multiple on the basket of stocks in the ETF. The ETFs raise their overall dividend yield by reducing holdings of stocks whose prices have risen relative to dividend streams. You can find all WisdomTree ETFs by going to the ETF Analyzer and typing “WisdomTree” in the search box. [Bargain-Basement ETFs.]

Actively-managed ETFs are a more recent industry innovation. These ETFs offer transparency, tax advantages and lower fees than that of actively managed mutual funds. Critics believe that the transparency offered makes ETF manager’s susceptible to front-running or copied by other investors. Currently, there is only a small selection of this ETF type, but fund providers like AdvisorShares are currently working on more selections. [All About AdvisorShares’ New ETF.]

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.