In theory, plenty of dividend exchange traded funds should help investors limit portfolio volatility. The PowerShares S&P 500 High Dividend Low Volatility Portfolio (NYSE: SPHD), one of 2016's best-performing dividend strategies, delivers on that objective.

With its emphasis on low volatility and high yields, SPHD can be considered a multi-factor strategy. The ETF holds the 50 S&P 500 stocks with the lowest trailing 12-month volatility and highest dividend yields, hence the significant allocations to real estate and utilities stocks.

Utilities, perhaps not surprisingly, are SPHD's largest sector allocation, followed by industrials and real estate stocks. Those sectors combine for about 46 percent of SPHD's weight. In what may be a surprise to some followers of low volatility strategies, SPHD's fourth-largest sector weight is more than 12 percent to technology names.

SPHD has a trailing 12-month distribution rate of 3.6 percent and allocates a combined 32.2 percent of its weight to rate-sensitive utilities and real estate stocks, making it an easy target for those eager to criticize low volatility and dividend ETFs.

“Despite its volatility screen, the fund has exhibited only slightly lower volatility than the S&P 500. That's because its focus on dividend yield pulls it toward some of the riskier names in the index to begin with, which its volatility screen helps offset,” according to Morningstar.

While it is not substantially less volatile than the S&P 500, SPHD has managed to outperform the benchmark U.S. equity index by nearly 240 basis points in its nearly four years on the market.

Disclosure: The author owns shares of SPHD.