Low-volatility exchange traded funds and their underlying indexes are, for the most part, intended to be sector agnostic.

However, depending on a low-volatility index’s methodology, some of the same groups consistently take on large weights in the fund. Take the example of the popular Invesco S&P 500 Low Volatility ETF (SPLV) and its benchmark, the S&P 500 Low Volatility Index.

That index includes the 100 members of the S&P 500 exhibiting the lowest volatility over the trailing 12 months. It’s rebalanced in February, May, August, and November. Perhaps not surprisingly, SPLV currently allocates about 40% of its weight to the consumer staples and utilities sectors, two groups with long-running reputations for being docile relative to other sectors.

However, technology — a sector with a reputation for volatility — is becoming a mainstay in the S&P 500 Low Volatility Index.

“Changes in the latest rebalance for the S&P 500 Low Volatility Index, effective after the market close on Nov. 19, 2021, were small. Notably, IT still holds a significant weight (9%) in the context of the history of the low volatility index. Since 2017, it has maintained a weight of 5% or more in the low volatility index, the lengthiest run in index history back to 1991,” according to S&P Dow Jones Indices.

To be precise, SPLV’s tech weight as of Nov. 19 was 8.69%. That makes tech the ETF’s fifth-largest sector weight, but that puts it ahead of groups that many investors might think of as less volatile than tech. Those include financial services and real estate. Still, SPLV is significantly underweight to tech relative to the cap-weighted S&P 500.

“For the broader S&P 500, IT’s underweight is still the largest difference between the S&P 500 Low Volatility Index and the S&P 500. The overweights in Utilities and Consumers Staples pick up the slack on the other end of the spectrum,” adds S&P Dow Jones.

How SPLV sources tech is also of importance to investors. Not surprisingly, the fund isn’t home to high octane new age tech names. Today, SPLV holds nine tech stocks, including Accenture (NYSE:ACN) and Dow components Microsoft (NASDAQ:MSFT) and Cisco Systems (NASDAQ:CSCO).

SPLV holds 107 stocks, not 100. The fund currently has no exposure to the energy sector. Even without exposure to the best-performing sector in the S&P 500, SPLV is up an admirable 15% year-to-date.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.