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Low-volatility exchange traded funds gained investor attention at the end of last year. They were used as defensive positions amid the uncertainty of the Eurozone crisis and the weak U.S. economic outlook. Today, is a low-volatility strategy still valid?

"Year-to-date through April 4, the S&P 500 Index was up 12% and was led by cyclical sectors such as consumer discretionary, financials and information technology. These sectors have historically incurred above-average volatility, and not coincidentally, offer, on average, dividend yields below that of the S&P 500 Index, in contrast to the more defensive consumer staples, health care and utilities sector that were in investor favor in 2011, but less so in 2012," Todd Rosenbluth, S&P Capital IQ ETF Analyst wrote on MarketScope.

By taking a closer look at low volatility ETFs, it is apparent that the more defensive sectors are represented. Whether or not a low volatility ETF is right for you depends on understanding what they own, since past performance means nothing for future performance.

  • PowerShares S&P Low Volatility ETF (SPLV)With assets at $1.6 billion, this is the largest and most frequently traded ETF in this sector. Utilities, consumer staples and health care dominate the top holdings. The expense ratio is 0.25% and the ETF was up 3.9% at the start of April.
  • Russell 1000 Low Volatility ETF (LVOL) This fund has about $72 million in assets and focuses in on consumer staples, industrials and information technology. The management fee is 0.49% but the net expense ratio is 0.20% after fee waivers, and the ETF is up 4.8% at the start of April.
  • iShares USA Minimum Volatility Index Fund (USMV) This is the smallest of the 3 funds, and assets are at $20 million. The ETF tracks both large and medium-cap companies and is the most diversified of the funds studied. Health care, consumer staples and information technology dominate the holdings. The funds touts a 0.15% expense ratio and is up 6.1% this year through early April.

Tisha Guerrero contributed to this article.

Source: Are Low-Volatility ETFs Still High Priority?