One critique of defensive-equity (low-volatility) strategies is that they're repackaged versions of two known investment styles: value and profitability. That statement implies that defensive strategies are nothing new, and investors should forgo them in favor of others that explicitly target the value and profitability factors.
There is some truth to this statement, but context matters. Low-volatility strategies have had significant but inconsistent exposure to both value and profitability. Therefore, investors who want exposure to these factors are better off with a strategy that explicitly targets those types of stocks. Those who want to reduce risk should stick with defensive strategies but should not assume they're directly exposed to value, profitability, or both.
Daniel Sotiroff does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.