Exchange traded funds pegged to dividend and low-volatility strategies have been huge sellers in 2012 with investors looking for stock ETFs that feature income and reduced risk.

In fact, Invesco PowerShares recently launched an ETF that attempts to combine the two approaches in one fund, PowerShares S&P 500 High Dividend Portfolio (NYSEArca: SPHD). [Low-Volatility, High-Dividend ETF Has Great Sales Hook]

However, investment researcher Morningstar warns investors that the two categories can overlap significantly in their portfolios and stock holdings.

Correlations between the different sets of ETFs are high because high dividend companies also tend to exhibit lower volatility in their share prices, it points out.

Some index providers and ETF managers have been “quite candid in saying there is a high level of correlation between the two strategies,” says Shannon Zimmerman, associate director of fund analysis for Morningstar.

However, he turns wary when marketing departments often pitch the strategies differently when “really there is a high degree of correlation between those approaches.” Low-volatility and dividend ETFs typically land in the large-cap value category, Zimmerman noted.

“If a company pays a dividend, that’s typically, though not always, a sign of financial health. So … the financially healthier companies tend to be the lower-volatility companies, as well. So there is a tight correlation there,” he said in an interview.

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