So how exactly does Aptus pounce on these investor fears? It sifts through the S&P 500 for stocks with plenty of price momentum that are at or close to their 52-week highs. The top 25 go into its portfolio.

Think of this strategy as the flip side of classic value investing. A deep-value investor might pick through the bargain bin for stocks that are being beaten up; BEMO hunts for a white-hot winner in order to keep riding that wave as investors pile in.

Behavioral ETFs are still limited to a handful of products -- which often do not even have "behavior" in the fund title -- including Alpha Architect's suite of five ETFs like ValueShares US Quantitative Value and MomentumShares US Quantitative Momentum.

Here is another option for investors: Take a step back with a so-called separately-managed account (SMA) with a behavioral focus. SMAs are not ETFs themselves, but invest in ETFs based on their own data-crunching and behavioral judgments.

That is what money manager AthenaInvest does, with impressive results. Its particular strategy is to examine what fund managers are thinking, organize them into "clusters," and then place bets based on where the market is likely heading -- taking advantage of the herd mentality, so to speak.

So when virtually all fund managers were making positive noises about the market earlier this year, AthenaInvest's Global Tactical fund bet big on a leveraged S&P 500 ETF. That was very good news for its investors, who reaped twice the rewards of most market bulls. The $150 million fund boasts returns of 20 percent year-to-date, and roughly 20 percent annually since inception in 2010.

"We don't use modern portfolio theory at all - we're all behavioral," said Tom Howard, AthenaInvest's CEO and chief investment officer. "And we were thrilled to see Dick Thaler win the Nobel Prize. It makes us all more legitimate."

This article was provided by Reuters.

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