And you might want to think twice about treasuries, which many analysts say are overpriced. "If you're going to have fixed-income exposure, take credit risk," says Thomas Digenan, U.S. equity strategist at UBS Global Asset Management. "Take well-thought-out credit risk in strong, stable companies."
Dump Europe. Another relatively simple approach is simply to get out of European assets. "If you've got specific European exposure, maybe it's time to walk away if you can't tolerate the volatility anymore," says Morningstar's Justice.
If you're feeling lucky, you could try shorting a European ETF like CurrencyShares Euro Trust (FXE). "You could set it up in your account in about five minutes," says Matt Hougan, president of ETF analytics for IndexUniverse. As with any short, though, timing is everything and the risks are large. If Europe reaches some political resolution to the crisis, bank stocks could soar. "Better for most retail investors to reduce their exposure somewhat if they're really concerned about it," says Hougan.
Preferred shares. Some analysts suggest preferred shares as a way of reducing risk while getting a healthy return. Preferred shares entitle the holder to dividend payments—typically of a fixed amount—ahead of common-share holders, and they rank higher in the claims hierarchy if the company goes bust. You can buy preferred shares through a mutual fund like Nuveen Preferred Securities (NPSAX), which was up 9.93 percent for the year as of June 7.
"As securities, they tend to be most attractive when interest rates are stable or declining," says Lipper's Mr. Tjornehoj. "If the situation in Europe spirals out of control, that would likely send interests rates falling, at least domestically, and that would be a boon to preferred shares."
There's a downside, though. Morningstar's Justice says such funds tend to be heavy on financials, which could be the sector that gets hit hardest by a Greek default. "It's higher in the capital structure," he says, "but the performance just gives you fixed income-like returns and equity-like volatility."
Go for gold. Then, of course, there is that age-old haven, gold. Two of the most popular ETFs right now are the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU). The latter may be a better option for most people, simply because it has a lower fee—25 basis points vs. 40 for GLD. "There's not a lot of difference in what the performance is going to be," says Justice. "You might as well opt for the cheaper one."
But there's no guarantee that gold will provide the protection many expect. Gold prices fell about 25 percent during the worst of the 2008 crisis, although they quickly recovered. "If there's a panic, people may reach for cash by selling gold," says Hougan, "but it's not entirely clear which direction it will go. As short-term hedge, I don't think you can count on it moving one way or another."
So far this year, notes Lipper's Tjornehoj, Europe's woes have tended to depress gold prices.
"In the long term, gold does not earn its cost of carry," notes UBS's Digenan. "The last time people were this fearful was 1980, and it didn't work out real well for those people." It took three decades for gold prices to recover their inflation-adjusted 1980 peak.
Some argue that you don't even need gold, and caution not to load up on it. There's another, little-known drawback: The IRS treats gold as a "collectible," not a financial investment, and levies a 28 percent tax on any gains, no matter how long you hold it. That compares with a capital-gains tax of 20 percent for financial investments of less than a year, or 15 percent on longer-term gains.
Short the euro. If you prefer to be a little more exotic, you can short the euro. The PowerShares DB U.S. Dollar Index ETF (UUP) takes a long bet on the dollar and a short bet on euro, yen, franc, and several other currencies. Hougan calls it "an easy way for investors to make a bet that the dollar will appreciate against a basket of global currencies highlighted by the euro, without taking on a short account, which involves opening a margin account."