Three ETFs to Safeguard a Portfolio | ETF Trends

Investors are feeling distracted by the constant stream of negative news, from slow U.S. growth to Europe’s debt crisis. Before leaving the stock market altogether, these exchange traded funds can safeguard an investment strategy and help tune out the naysayers.

In a podcast earlier this week, I discussed consumer staples ETFs as a safer option for investors looking to dip a toe into the volatile stock market.

Gary Gordon for The Street reports that certain exchange traded funds can help guide a safety-focused strategy and let investors sleep at night. Emerging market sovereign debt, foreign markets and high yield corporate debt are all choices that can’t go too wrong.

Emerging markets sovereign debt is looking much healthier than  U.S. bonds. The yields are greater and the diversification benefits are inherent.The reality that the Federal Reserve and the central banks of the world endeavor to create inflation only makes things less attractive for the safe- haven darling of U.S. government debt. The PowerShares Emerging Market Sovereign (NYSEArca: PCY) is currently yielding 5.25%. [Emerging Bond ETFs that Hedge Currency Risks]

The idea of foreign stocks is frightening to most investors at this time. However, the fact remains that emerging economies such as China are the engines for major global growth and that is not going to change. Vanguard Emerging Markets (NYSEArca: VWO) is currently trading at a price-to-earnings discount of 26%, reports Gordon. [ETF Chart of the Day: Emerging Markets]

Lastly, the high-yield corporate debt ETFs are a good choice to protect and hedge against inflation. The U.S. Consumer Price Index has annualized 2.25% over the past five years, and the net worth and wage growth as we knew it has been stunted by the 2008 market pullback. The iShares iBoxx $ HY Corporate Bond Fund ETF (NYSEArca: HYG) is currently yielding 7.20%. [Multi Asset ETFs for the Long Term]

Tisha Guerrero 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.