The prosperity of low volatility exchange-traded funds has been well-documented this year and with good reason. Put simply, in a market environment that has been far from sanguine, ETFs such as the PowerShares S&P 500 Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: SPLV)) have done their jobs.
While the returns are not jaw-dropping, SPLV, one of the largest low volatility ETFs, is up 1.1 percent year-to-date, while the S&P 500 is down more than 2 percent. SPLV, which celebrates its fifth anniversary in May, is comprised of the 100 S&P 500 members with the lowest trailing 12-month volatility.
As an investment factor, low volatility, like other factors, has its critics. The most frequent criticism being that although ETFs like SPLV help investors skirt volatility, investors risk “leaving ...
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