Despite the growth of smart or strategic beta exchange traded funds, the growth trajectory of these funds is undeniable.

There were 335 such ETFs with nearly $300 billion in combined assets under management at the end of 2013, a number that has risen significantly this year and that number is expected to continue rising as institutional investors boost their usage of ETFs that blend elements of active management into a passive wrapper. [Advantages of Smart Beta ETFs]

With so much disdain for the term “smart beta,” issuers acknowledge educating investors about these products is pivotal.

“Investors increasingly are focusing on ETFs. In particular, investors are interested in ETFs that track indices with weighting schemes other than the traditional market cap, such as the S&P 500 Index,” said S&P Capital IQ in a new research note. These ETFs have gained the moniker “smart beta” but many in the industry, including S&P Capital IQ, dislike the term as it presumes such ETFs are better than market-cap weighted products. Education about what is and what is not inside is imperative in our view.”

Even with Tuesday’s gain of almost 2%, which extended the S&P 500’s winning streak to four days, some alternatively-weighted ETFs have outpaced the benchmark U.S. index over the past month. Not surprisingly, one of those funds is the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV), which is up half a percent despite weakness in the broader market.

Invesco PowerShares Managing Director Dan Draper told S&P Capital IQ “that investors will pay more for riskier assets and those stocks within an index with the lowest volatilities often trade at discounted valuations. Further, in light of the recent market volatility (the S&P 500 Index was recently down 7% from its highs), investors who wish to remain in the market but reduce their risk profile should find this style appealing.” [A Return to Low Vol ETFs]

SPLV has previously been viewed as a quasi-utilities ETF due to its often large overweight position in that sector, but that assessment misses the mark because if that sector’s volatility rises or another sector becomes less volatile, the S&P 500 Low Volatility Index, SPLV’s underlying benchmark, is adjusted to reflect those changes in volatility at its quarterly rebalances.

In fact, at 23.4% of the ETF’s weight, financial services stocks are currently SPLV’s largest weight at 300-basis point advantage over utilities. S&P Capital IQ rates SPLV overweight.

Dividend stocks often prove durable or, at the very least, less bad during times of market duress and that has been the case with the WisdomTree LargeCap Dividend Fund (NYSEArca: DLN). The $2.2 billion DLN has recently offered slight out-performance over the S&P 500.

DLN’s underlying index, the WisdomTree LargeCap Dividend Index (WTLDI), “is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share,” according to WisdomTree. Translation: DLN eschews weighting by dividend increase of yield, the latter of which can lead investors toward stocks vulnerable to dividend cuts. [A Strategic Avenue to Dividend ETFs]

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