ETF investors are no doubt concerned about the modest slide that stocks have begun this month turning into a more serious sell off. This uncertainty becomes even more heightened by the fact that September is historically the weakest month of the year. According to recent data published by Yardeni Research, the month of September has had an average annual return of -1.00% since 1928. That’s certainly not an inspiring statistic even in light of the resilience in stocks over the last several years.

While I don’t recommend making changes strictly in adherence to monthly average returns, a portfolio that is fully invested may want to make some subtle shifts if additional volatility picks up. That may include adding a traditional inverse position to hedge existing longs, moving a portion of the portfolio to cash, or swapping out high beta sectors for more defensive positions.

Hedging a portfolio of existing longs can be a useful strategy to protect gains of highly appreciated positions. However, it can often be difficult to execute if you are not highly disciplined with your entry point and risk parameters. Most investors opt to accomplish this feat by using options or shorting individual securities. However, those methods may not be available in an IRA or similar retirement account.

One potential alternative is to use an inverse ETF such as the ProShares Short Russell 2000 ETF (RWM). This fund seeks to provide investment results that correspond to the inverse price movement of the Russell 2000 Index on a daily basis. The underperformance of the iShares Russell 2000 ETF (IWM) has been well documented this year and continues to be a thorn in the side of small cap investors.   If the markets do roll over, this small cap index may find itself re-testing its 2014 lows.

I typically only encourage investors to add inverse ETFs with short time horizonsand a defined sell discipline. That way if the market does continue to move higher, you are able to exit the position with only a small loss and it doesn’t weigh significantly on long-term performance.

Another strategy to consider is shifting to a defensive holding such as thePowerShares S&P 500 Low Volatility Portfolio (SPLV) or PowerShares S&P 500 Downside Hedged Portfolio (PHDG).   SPLV invests in the 100 lowest volatility stocks in the S&P 500 Index, while PHDG is an active ETF that rotates between equities, volatility and cash. Both funds are designed to allow you the flexibility to still capture upside momentum with lower overall drawdown than a fully loaded stock index.

The key to these ETFs is being aware that they will likely underperform in a sharply rising market. The very same qualities that make them attractive as defensive positions will be their Achilles heel when high beta sectors dominate.

Lastly, don’t count out cash or short-term bond funds as an option to preserve capital. Money market funds can be a temporary hideout from which you can safely scan the investment universe with a clear head and deploy capital at opportunistic entry points.

The biggest mistake that investors make with cash is holding too much of it for too long and watching the world pass them by. You have to be disciplined enough to step back into stock, bonds, or commodities at a predetermined level to avoid damaging your returns.

Hedging your exposure can take multiple forms that will vary for each investor according to your risk tolerance, comfort level, and existing exposure. I always recommend avoiding large bets that can considerably skew your asset allocation and divert focus away from core positions that will be the primary drivers of long-term returns. However, these tactical tools can make an impact in lowering portfolio volatility through strategic positioning.