There are times that a longer term investor may look at the market and wish to reduce the overall volatility of his portfolio. To put it simply, one may want to reduce the daily fluctuations of profit and loss while still participating in the markets. With that in mind, today we will highlight an ETF that allows for investing in the S&P 500 but with a volatility hedge built in.

The ETF we will talk about today is PowerShares S&P 500 Low Volatility Portfolio (SPLV  ). If one were to consider moving portions of their portfolio to more low volatility names then this one product could be a choice. This ETF essentially acts as a buffer to your overall portfolio in down markets, which many are predicting will be coming soon.

If there were a period of market expansion then the SPLV would still participate in that while pushing out all the noise of the daily S&P 500 moves. Now, you may ask yourself if you would be missing out on market gains when the market shoot higher and the answer would be no. For the last five years we can all agree that the markets have been straight up. The S&P 500 has gained 14% in that time period. The SPLV, while being a less volatile ride has enjoyed a 13.3% gain after expenses. Since the funds inception it has almost perfectly matched the S&P 500 index.

This is certainly not for everyone. There are investors who can handle the volatility and are more active with their portfolio's. For those that want a more hands off approach but don't want to see sharp moves in their account values then this ETF is certainly one to consider.