Earlier this week, we highlighted the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and its surprisingly low weight to the utilities sector, a group often thought as the premier hideout for investors looking to dodge equity market volatility.

SPLV, one the largest low volatility ETFs, targets 100 of the least volatile stocks from the S&P 500 index and weights the positions inverse to volatility – the least volatile stocks has a greater weight in in the portfolio. [Positive Changes for a Popular Low Vol ETF]

The low volatility emphasis has previously prompted criticism that SPLV had an excessive utilities allocation, making the ETF vulnerable to rising interest rates. However, SPLV has changed, for the better for those bearish on utilities, as the ETF’s utilities weight has plummeted to 2.65% as of June17 from over 19% in September. Why the S&P 500 Low Volatility Index, SPLV’s underlying benchmark, has slashed utilities exposure, is important.

“The Utilities sector has had a prominent weight in the S&P 500 Low Volatility Index throughout most of its history since 1992; the current 2.7% allocation to Utilities is the lowest in the entire history of the index,” according to S&P Dow Jones Indices.

Interestingly, SPLV’s reduced exposure to utilities stocks does not correspond with a significant jump in volatility for that sector. That might surprise investors because 10-year Treasury yields have climbed 19% over the past three months and utilities usually have the worst correlation to rising government bond yields among all sectors.

As S&P Dow Jones Indices notes, the rolling 252-day volatility of the S&P 500 utilities sector has climbed recently, but not alarmingly so and remains below levels seen in late 2009. Said differently, SPLV’s sector shifts are more the result of declining volatility in other groups than rising volatility for utilities stocks. [Surprises in Low Volatility ETFs]