The PowerShares fund, for example, has nearly half of its portfolio in those three groups. Both it and the iShares fund have yields north of 2 percent, which reflect the higher payouts of those kinds of companies.
Yet what appears to be a virtue can be a disadvantage, particularly if the bull has room to run and the market still favors growth stocks.
By their very staid nature, low-volatility funds may not outpace the S&P 500, which rose 32 percent last year with dividends reinvested, compared with 25 percent for the iShares fund.
Instead of trying to guess where the market is going and reacting week to week, a dividend-growth strategy might prove potent in the long run. The Vanguard Dividend Appreciation Index ETF (VIG), for example, lagged the S&P 500 by only about 1 percentage point over the past three years.
The Vanguard fund, which focuses on companies that consistently raise their dividends, is slightly more diversified than the other low-volatility funds mentioned. Its portfolio is more spread out among mega-, large- and medium-size companies with holdings that include Abbott Laboratories, Procter & Gamble Co and PepsiCo Inc. It costs only 0.10 percent annually to own and was up 18 percent for the year ended February 20.
Companies paying lower but growing dividends might be bargains, Matt Freund, chief investment officer of USAA Funds in San Antonio, stated in a recent market commentary.
"Companies increasing their dividend payments are making a commitment to the market," Freund said. "They are telling investors that their business is strong enough to generate the free cash needed to pay higher dividends in the future."
Whatever path you take, do not confuse low-volatility funds with no volatility. All low-volatility stock funds will still react to market swoons. And concentrating too much on defensive stocks will certainly create a drag on performance if growth still dominates. But that may not be a bad thing if you want to focus on total return over the long haul.