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Tickers in this Article: EXC, FXA, TIP, BABY
Investors in volatile markets stay in the market only if they feel their investments are "safe". Of course, nothing in the stock market is 100% safe, but some investments have a tendency to hold up better in down markets. In this article I'll explore a number of sectors that have held up well and a few stocks/ETFs that could be options for investors. (To learn more on reducing volatility with ETF investments, check out Give ETF Pairs Trades A Chance.)

Market Hideouts
Exelon (NYSE:EXC)
The Dow Jones Utility Average has held up well during the first half of 2008, only losing 2% versus a 13% drop in the S&P 500. A major reason for the outperformance is that investors have viewed the utilities as a safe haven for when the overall stock market struggles. There is also the dividend factor; most utilities pay sizable annual dividends, which are also sought after during tumultuous times. My favorite stock in the sector is the largest in the country, Exelon. Its exposure to nuclear energy -so to speak - and the bullish chart make for a great long-term investment. The dividend yield is only 2.2%, but the growth potential with nuclear energy is the real reason Exelon is so attractive.

Natus Medical (Nasdaq:BABY)
The addition to the S&P 600 Small-Cap Index is not the reason Natus has made the "hideout" list, but it was the boost it needed to hit a new all-time high on June 11, 2008. The company focuses mainly on products that are used for newborns to detect any type of medical ailments as well as systems for neonatal monitoring. In June, the company raised its second-quarter revenue guidance to account for an earlier acquisition. This comes after reporting record net income for the first quarter of 2008, an increase of 60% over last year's number. Revenue increased 36% from the year earlier to $36.9 million for the quarter. While Natus may be more volatile than Exelon, the growth potential is there along with the assurance that one area people will not cut costs is with their children's health.

Rydex CurrencyShares Australian Dollar ETF (NYSE:FXA)
The U.S. dollar has been trending lower for years and as that occurs, many of its counterparts have been rising. The Australian dollar has been extremely strong over the last two years and in July 2008 hit a new 24-year high versus the greenback. Spurring the Australian dollar higher is a combination of a weak U.S. dollar and the thought that the Australian government may be close to raising interest rates to combat inflation. This in turn would boost the Australian dollar. Not only has FXA been a great investment for capital gains the last two years, but it also pays over 6% annual dividend yield. This dividend is distributed monthly. The one problem with FXA is that the "short U.S. dollar trade" may be close to an end and therefor upside for FXA limited.

iShares Lehman TIPS Bond Fund ETF (NYSE:TIP)
One of the major worries that investors are concerned about regarding the U.S. economy is inflation. Couple that with the potential for slowing growth and the fears are heightened. One choice for investors that would like to protect against inflation and at the same time stay out of equities is TIP. Through the first six months of 2008 the ETF was up a mere 1.9%, however with a dividend yield of 8.1%, the absolute return is increased. Of the bond fund choices, TIP is one of my favorites. (For more on bond funds, read Evaluating Bond Funds: Keeping It Simple and Bond Funds Boost Income, Reduce Risk.)

Is it Too Late to Seek Safety?
With the Dow already off 21% from the high, is it too late to turn to the "safe-haven" investments? That is a question you must answer depending on your risk tolerance. After looking back on history and the current market environment, I believe we are much closer to a bottom than a top and only a small portion of safety stocks should be bought. That being said, if you consider yourself a conservative investor or stocks are keeping you up at night, safety is definitely the route for you.

To learn more about adding dividends to your income, read The Power of Dividend Growth.

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