3 ETFs That May Offer Peace of Mind, No Matter What Comes Next in the Iran War

If you are looking for the ultimate “peace of mind” strategy, you have to move beyond low-volatility equity funds like the USA Min Vol Ishares Edge MSCI ETF (USMV) and Invesco S&P 500 Low Volatility ETF (SPLV). While they typically fall less than the S&P 500 Index ($SPX) during rough markets, they still fall. A lot. And as I’ve seen over the decades, human nature is such that we like to keep score in percentage terms on the way up.

But on the way down, it is more a matter of “I lost how many thousands of dollars?!” That expression is often followed by language typically reserved for raunchy comedians or perhaps a politician.

That’s what happens because these are not low-volatility ETFs. They are lower-volatility funds. And as I just mentioned, relative returns stop being important when you’re down 20%. Or maybe 40% or more, during systemic collapses. 

In Search of ‘Low’ Volatility ETFs

As I've written here many times, I personally have an unusually tight risk budget. For the most part, I keep it at 5% — maybe 10% if I truly make a giant error. I practice all types of hedging and other risk-mitigation strategies, so if my total portfolio drops 10% from any past peak level, that’s 100% on me.

 I’ve trained myself to use all varieties of modern creations, from option strategies, swing trading, and pairing offense and defense exchange-traded funds (ETFs) to try to “get the part in the middle.” That is, sacrifice the best years of others in exchange for limiting my worst-case drawdown significantly.

But for ETF investing, many investors prefer to identify a “solution in a box,” if you will. For growth and income, that’s easy to find. And for pure shorting approaches, essentially profiting from market declines, that’s there too. However, I’m talking about something different. 

Here are a few ETFs I’ve identified that are among the few that can check the following boxes:

• Not a bond ETF (I’m talking equity market risk here).
• Been around for more than 10 years.
• Has never lost more than 15% from any peak to trough level.
• Structured in a way that is designed to keep returns “in the middle” without the highs and lows of the S&P 500. 

What this really comes down to is some form of arbitrage. That’s where the ETF’s entire makeup is geared toward, as I say, “playing offense and defense at the same time.” Here are three such ETFs:

NYLI Merger Arbitrage ETF (MNA)

Merger arbitrage is one of the most consistent ways to capture a spread without taking on broad market risk. When one company agrees to buy another, the target company’s stock usually trades at a small discount to the takeover price until the deal closes. 

The NYLI Merger Arbitrage ETF (MNA) buys these targets and shorts the acquirer (or hedges the market) to capture that tiny, predictable gap.

Historically, merger arbitrage has one of the lowest maximum drawdowns in the alternative space. MNA’s largest peak-to-trough decline since inception has hovered around 6% to 7%, even during periods of extreme market stress. 

In a world of 4.4% Treasury yields, merger spreads are resetting higher. MNA offers a way to earn a return that is linked to deal completions rather than the erratic price of a barrel of oil or the latest AI chip forecast.

AGF U.S. Market Neutral Anti-Beta Fund (BTAL)

This is one of the 10 I use in my ROAR 10 ETF model, which I’ve written about here briefly in the past. It deserves a closer look for its unique anti-crash tendencies. AGF U.S. Market Neutral Anti-Beta Fund (BTAL) works by being long low-beta stocks and short high-beta stocks.

Because this fund is market-neutral (it has nearly zero net exposure to the S&P 500), it essentially creates its own path. While it can have periods of underperformance when junk stocks are rallying, its maximum drawdown is typically contained within that 10% to 15% window because it is designed to rise when the rest of your portfolio is falling.

Federated Hermes MDT Market Neutral ETF (MKTN)

Unlike broad market funds, Federated Hermes MDT Market Neutral ETF (MKTN) employs a sophisticated quantitative model to simultaneously buy stocks expected to outperform and short those expected to lag, aiming for a zero-beta profile that is independent of market direction. 

Since its inception in late 2025, it has functioned as a pure volatility dampener, maintaining a tight trading range and a remarkably low correlation to the S&P 500. For an investor seeking a bunker strategy, MKTN is the structural equivalent of opting out of the geopolitical gamble and betting instead on the relative performance of individual companies.

You Get What You Pay For

The tradeoff for these ultra-low drawdown profiles is capped upside. These ETFs are not going to give you a 30% return in a bull market. They are “get rich slowly” tools designed to preserve capital and provide a steady 4% to 7% return that isn't correlated to the S&P 500. More and more, that is looking better going forward than it has in the past. 

Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob's written research, check out ETFYourself.com.