Low-volatility ETFs have become a popular choice with nervous investors who want stock market exposure with fewer ups and downs. However, these conservative funds may lag in a prolonged rally.

“In a sustained bull market — if you want to be invested in stocks at all — you would be much better off in a broad-based, all-in index fund than a low-volatility ETF,” wrote John Wasik at Reuters in a report this week.

“To be sure, as risk-reduction vehicles, low-volatility ETFs play it safer by investing in mature companies with steady cash flows and solid dividends. They are less likely to be sold off in a market rout such as the one experienced last year,” he added. [Low-Volatility ETFs: Wait For Full Market Cycle?]

ETF providers have rolled out several funds in the past year that are designed to provide a smoother ride for equity investors. [Ups and Downs of Low-Volatility ETFs]

The largest such fund is the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV), with nearly $1.7 billion in assets. It was launched in May 2011. [What You Need to Know About Low-Volatility ETFs]

The tracking index consists of the 100 stocks in the S&P 500 with the lowest realized volatility over the past 12 months. [Sizing Up a Low-Volatility ETF]

SPLV is up 3% year to date, compared with a 10.6% return for the S&P 500. [Chart of the Day: Low Volatility ETF]