With all the anticipation centered on possible interest rate cuts, the concept of targeting smart ETF choices as interest rate-proof investments seems irrational, if not outright absurd. Why go with a diverse ETF portfolio when risk-on assets like cryptocurrencies are responding so well to anticipated cuts?

Frankly, I think American society has gotten too used to the quick-and-easy modulations that the Federal Reserve has been implementing. At some point, we must pay the piper; otherwise, everybody would just turn to central bank policies to address deep-seated fundamental vulnerabilities. However, just as a steroid-using cheat finds out later, consequences exist for pushing boundaries.

That’s why I focus on smart ETF choices makes sense because we just don’t know what might happen next. Sure, we can talk about lowering borrowing costs – but during a robust labor market cycle? I’m sorry but that doesn’t seem to make much sense.

For those who are skeptical, you might consider the below interest rate-proof investments.

Consumer Staples Select Sector SPDR Fund (XLP)

What it is: One of the top sector-specific smart ETF choices, the Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) is an exchange-traded fund that corresponds generally to the price and yield performance of the Consumer Staples Select Sector index. Primarily, the companies in the XLP focus on essentials such as food/beverages, household products and personal care.

Relevance: Fundamentally, consumer staples companies benefit from a stable demand profile, irrespective of economic conditions. For example, no matter what’s going on with the equities market, you probably brush your teeth every day. And if you don’t, you should. Therefore, the XLP represents one of the steady growth investments just based on consistent revenue streams.

Pros: Many if not most of the XLP’s individual holdings represent top brands, such as Procter & Gamble (NYSE:PG), Costco (NASDAQ:COST) and PepsiCo (NASDAQ:PEP). Also, the expense ratio sits at 0.10%, below the sector average of 0.46%.

Cons: You should know going in that you’re probably not going to get rich off of XLP. Also, it’s not performing that well right now, down about 6% year-to-date.

Vanguard Utilities Index Fund ETF (VPU)

What it is: Another arguably excellent idea for smart ETF choices if you’re concerned about monetary policy assumptions, the Vanguard Utilities Index Fund ETF (NYSEARCA:VPU) is a fund that seeks to track the performance of the MSCI US Investable Market index. Under this canvas, investors enjoy broad access to equities of large, mid-sized and small utility firms.

Relevance: Fundamentally, the VPU fund makes for an intriguing idea for interest rate-proof investments because of the natural monopoly concept. While legally, nothing stops would-be upstarts from competing against established utilities, the onerous regulatory nature of the industry leaves many sector players deeply entrenched in their core markets. So, high interest rates or not, the individual holdings should offer significant relevance.

Pros: Aside from the natural monopoly concept, utilities benefit from a captive audience. No matter what, residences and businesses must pay their bills. Cynically, that makes VPU a solid idea for a diverse ETF portfolio irrespective of outside conditions.

Cons: Frankly, utilities are boring. And just because they’re boring, doesn’t mean that they’re guaranteed a slow march forward. For example, the VPU is down almost 11% YTD.

Invesco DB US Dollar Index Bullish Fund (UUP)

What it is: One of the smart ETF choices if you’re supremely confident in the contrarian monetary policy narrative, the Invesco DB US Dollar Index Bullish Fund (NYSEARCA:UUP) could be an enticing opportunity. According to its prospectus, the UUP seeks to establish long positions in the ICE U.S. Dollar Index futures contracts. For those who speak English, the UUP should rise if the dollar rises in strength.

Relevance: Former President, reality TV star, real estate tycoon and apparently monetary policy expert Donald J. Trump once blasted other countries for devaluing their currencies. Filter out the fiery rhetoric and he does have a point. And it also applies in reverse. If interest rates rise, the greenback should likewise gain relative to other currencies. And with that, the UUP should rise as well.

Pros: If you don’t want to merely mitigate monetary policy fluctuations but more directly wager on it, the UUP offers a convenient mechanism for speculation. Also, it’s up nearly 5% for the year.

Cons: To be quite blunt, speculators would be taking sizable risks for possibly limited upside. And it could be choppy since it’s practically limited to just currency fluctuations and not on business enterprises.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.