While the markets attention has been focused on equities with U.S. stocks pushing toward new heights and an aging three-decade long bull run in bonds, investors should consider alternative assets to better diversify and limit downside risk.

“With markets near all-time highs, it is difficult to apply modern portfolio theory and be truly diversified,” Wieder said. “Investors should instead implement multi-directional strategies that are needed in the current market environment to be truly diversified.”

For example, as part of a diversified portfolio that employs some form of risk management, investors may consider precious metals ETFs that offer low correlation to equities and fixed-income assets. These precious metals exposure would zig while stocks and bonds zag.

Investors can gain exposure to precious metals through a number of physically backed ETF options, including ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), ETFS Physical Silver Shares (NYSEArca: SIVR), ETFS Physical Platinum Shares (NYSEArca: PPLT) and ETFS Physical Palladium Shares (NYSEArca: PALL). ETF investors can also use the ETFS Physical Precious Metals Basket Shares (NYSEArca: GLTR) as a catch-all of all four precious metals.

Financial advisors who are interested in learning more about hedging strategies for potential volatility ahead can register for the Thursday, January 12 webcast here.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.