The global stock market has been shaky, with a series of woes related to China and oil price. While the number of headwinds is raising questions on the health of the global economy, domestic growth seems to be on track with a spate of encouraging data lately. Amid heightened volatility and uncertainty, investors are seeking some smart stock selection strategies to alleviate the risks in the market. One such strategy is smart beta, which seeks to deliver better risk-adjusted returns, and has the potential to outperform the market even in turbulent times, while keeping the cost low. This strategy has been gaining immense popularity in recent years given its unique features and incredible stock selection methodology. As per PowerShares , smart beta is the fastest-growing segment of the ETF industry, with a staggering growth of 21% over the past three years. It currently accounts for 12% of the total ETF industry (see all the ETF categories here ). Why Smart Beta? The smart beta strategy helps to capture market inefficiencies in a transparent way by adding extra metrics, like dividends, volatility, revenue, earnings, momentum, equal weight and other fundamental factors, to the market cap or rules-based indices. It often closes the gap between passive and active investing. Also, it takes specific factors from the active management universe at a lower cost and instills it in a passive listed fund. As a result, the smart beta strategy offers the best of both active and passive strategies, providing investors an opportunity to increase portfolio diversification, reduce risk and enhance returns (alpha generation) over time. While the promise of smart beta is great, the strategy has certain drawbacks, including concentration issues, higher turnover and lower trading volumes. Though backtest results showed their outperformance over longer periods, the strategy could lag during a specific time period or in a particular economic cycle. Still, investors could earn above-average returns by selecting the right ETFs according to the market conditions or trends. Smart Beta ETFs in Focus The space is crowded with a variety of products, including the simplest equal-weighting, fundamental-weighting and volatility/momentum-based weighting methodologies. However, dividend ETFs are the primary drivers of smart beta growth this year, followed by low volatility and value factor. As such, we have highlighted four smart beta ETFs that are suitable for investors in the current choppy market and are low-cost choices in their specific fields. PowerShares S&P 500 High Dividend Portfolio ETF (NYSEARCA: SPHD ) The lure of dividend ETFs is back, as yields are at lower levels and volatility is at its peak. While there are several smart beta ETFs targeting dividend investing, SPHD could be an excellent choice. This fund follows the S&P 500 Low Volatility High Dividend Index and holds 50 securities, which have historically provided high dividend yields and low volatility. It is widely spread out across individual securities, as each holds less than 3.7% of assets. From a sector look, financials takes the top spot at 20.5%, while utilities, industrials and consumer discretionary round off the next three with a double-digit exposure each. The fund has so far managed assets worth $811.8 million, while volume is solid, trading at around 256,000 shares per day. The expense ratio came in at 0.30%. iShares MSCI USA Minimum Volatility ETF (NYSEARCA: USMV ) Given the high level of volatility, investors could be well protected with USMV. This is the largest and most popular ETF in the low volatility space, with AUM of $9.7 billion and average daily volume of 2.6 million shares. It offers exposure to 169 U.S. stocks having lower volatility characteristics than the broader U.S. equity market by tracking the MSCI USA Minimum Volatility Index. The expense ratio comes in at 0.15%. The fund is well spread across a number of components, with each holding less than 1.7% share. From a sector look, financials, healthcare, consumer staples and information technology occupy the top positions, with double-digit exposure each. The fund has a Zacks ETF Rank of 2 or “Buy” rating with a Medium risk outlook. iShares MSCI USA Quality Factor ETF (NYSEARCA: QUAL ) Though the chance of rate hikes this month faded out given the ongoing financial instability, a slew of encouraging data lately points to a rate hike sometime later this year, putting the spotlight on quality ETFs like QUAL. This fund tracks the MSCI USA Sector Neutral Quality Index and provides exposure to the stocks with positive fundamentals, like high return on equity, stable year-over-year earnings growth and low financial leverage. This results in a basket of 123 securities that are pretty spread across a number of sectors and securities, with none holding more than 5.11% of assets. Information technology, financials, healthcare and consumer discretionary each accounts for double-digit exposure. The product has amassed more than $2 billion in its asset base and charges just 15 bps in annual fees from investors. However, average trading volume is solid, at more than 295,000 shares per day. SPDR Russell 1000 Momentum Focus ETF (NYSEARCA: ONEO ) With the receding fears of a recession in the U.S., investors could tap the upcoming stock rally with this momentum ETF. This fund provides exposure to the large cap U.S. stocks having a combination of core factors (high value, high quality and low size characteristics) with high momentum characteristics. This is easily done by tracking the Russell 1000 Momentum Focused Factor Index, and the approach results in a broad basket of 908 securities that are widely diversified, with none holding more than 0.83% of assets. Consumer discretionary takes the top spot at 20.2%, while producer durables and financial services round off the next two spots with double-digit exposure each. ONEO is new to the space, having accumulated $319.5 million in its asset base within three months. It charges a lower fee of 20 bps per year and trades in solid volume of around 148,000 shares. Original Post