The global investing world, especially the risky assets, went into a tailspin recently on a host of factors including lack of transparency in the Fed tightening timeline, the rout in the Chinese economy and its repercussions in its stock market, the yuan devaluation earlier this month, an impending snap election in Greece, slowdown in the Japanese economy and an acute plunge in oil prices.

In short, concerns over global growth are widespread, causing a correction in the global stock markets. The U.S. stock-index futures recorded the deepest weekly decline in about four years past week. The tumult was triggered off on August 11 when China devalued its currency yuan and eventually spread into almost all asset classes. Since then, the global market correction ate away over $5 trillion of equity value, per Bloomberg. Commodity prices dived to a 16-year low, and credit risk in Asia rose to the highest level since March 2014.

Given these woes, risk-averse investors are treading cautiously as most are dumping stocks and junk bonds in favor of safe haven assets to protect their portfolio from capital erosion. Below we have highlighted three safe haven ETFs that investors can consider adding to their portfolio in the current volatility. These products are likely to gain should the turmoil worsen and volatility in the market continue to escalate.

Treasury Bonds 
 
iShares 20+ Year Treasury Bond ETF (TLT)
 
Though U.S. treasuries were out of favor a few days back due to worries over Fed tightening, heightened global uncertainty brought this safe asset into the limelight. Dimming prospects of the sooner-than-expected Fed rate hike, global growth worries and severely low oil price which put a lid on global inflation led treasury valuation to soar (read: U.S. Treasury ETFs Rise on Yuan Devaluation).

Yields on the U.S. benchmark 10-year notes slipped to 2.05% on August 21 from this year’s 2.50% high recorded on June 10 while yields on the U.S. benchmark 20-year notes plunged to 2.44% from the high of 2.98% on June 26.

The ultra-popular long-term Treasury ETF – TLT – tracks the Barclays Capital U.S. 20+ Year Treasury Bond Index and has AUM of $4.92 billion (read: ETFs to Lose or Gain from Solid July Job Data).

Expense ratio comes in at 0.15%. Holding 29 securities in its basket, the fund focuses on the top credit rating bonds with average maturity of 26.82 years and effective duration of 17.35 years. TLT was up 1.9% last week and 5.7% in the last one-month frame (as of August 21, 2015). The fund has a Zacks ETF Rank #3 (Hold).

Apart from TLT, investors can also consider 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ) and Vanguard Extended Duration Treasury ETF (EDV). These two ETFs were up 2% and 2.9% in the last one week (as of August 21, 2015). In the last one-month frame, each of these two ETFs gained over 9.4%.

Gold

SPDR Gold Trust ETF (GLD)
 
Gold is often viewed as a safe haven asset to protect against financial risks, and has performed well lately (despite deteriorating fundamentals) on heightened market volatility. The metal logged the largest weekly gains (as of August 21, 2015) since January.

Funds tracking the yellow metal, such as GLD, can be a good choice for investors seeking safety. GLD tracks the price of gold bullion measured in U.S. dollars. The fund is the most popular and liquid bet in its space with an asset base of $25.1 billion and an average trading volume of about six million shares a day. The fund charges 40 basis points as fees and gained more than 4% in the past one week and 6% in the last one-month frame (as of August 21, 2015).
 
Apart from GLD, investors can also consider COMEX Gold Trust (IAU), another popular choice in this space that returned almost similar to GLD last week. Both GLD and IAU have a Zacks ETF Rank #3 (Hold) (read: Short-Term Respite for Gold ETFs?).
 
Currency
 
CurrencyShares Japanese Yen Trust (FXY)
 
The Japanese currency, yen, is often considered a classic safe haven asset. Yen surged to a six-week high on August 21, 2015 as China-led worries wrecked havoc on the global equity and commodity markets.  Also, reduced expectations of a September Fed rate hike dampened the dollar to some extent and boosted yen. The sentiment regarding risk-aversion was so strong that yen gained despite the ultra-loose monetary policy in Japan.

Investors can target this currency via FXY, which measures the value of the yen against the price of the greenback. This $106 million-fund charges 40 basis points as fees. FXY was up 1.11% on August 21 and added 1.7% in the past week as of the same date. FXY has a Zacks ETF Rank #4 (Sell) as easy Japanese monetary policy will not favor the currency for long. In fact, the fund lost about 0.1% after hours (see: all the Currency ETFs here).

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