For its part, USMV has never been dominated by the utilities sector. Staples and utilities combine for just 21.8% of USMV’s weight, making the sectors the fourth- and sixth-largest respectively, in the ETF. Combined, staples and utilities barely exceed USMV’s healthcare weight of 20.1%.
“Currently, there isn’t a great difference in historical volatility for a large number of equities from a wide spectrum of sectors. Low volatility products therefore may well include allocations to sectors and industries not often seen,” notes Axioma.
Even the PowerShares S&P 500 High Dividend Portfolio (NYSEArca: SPHD) does not feature utilities as its largest sector allocation. SPHD tracks the S&P 500 Low Volatility High Dividend Index, which is comprised of 50 stocks taken from the S&P 500 that have historically exhibited high dividend yields and low volatility. [The Right Dividend ETF for the Times]
That would seem to imply utilities perpetually be SPHD’s largest sector weight given the group’s reputation for low volatility and high yields. However, financials are just ahead of utilities in SPHD’s sector lineup. Like SPLV, SPHD currently does not feature any utilities stocks among its top 10 holdings, but the ETF still sports a trailing 12-month yield of almost 3.3%.
PowerShares S&P 500 High Dividend Portfolio
