If a low volatility strategy is built from the bottom up by ranking individual stocks on their “volatility scores,” then success or failure will largely depend on whether or not that factor happens to be in favor. Smart beta, factor analysis, strategic beta, whatever you want to call it, is all the same thing. A subset of stocks from a large pool is identified to be more sensitive to or display certain quantifiable traits. The list of potential traits is inexhaustible, but some of the more common ones are value, growth, dividends, momentum, size, and, yes, volatility. The problem, however, is that there is no one magic factor that always works. Every factor will have periods when it is working and periods when it does not.
For the top-down, market-timing approach to volatility management, the drivers of returns will be at the asset class level, and the keys to success is being in the right place at the right time. Certainly if one has the wherewithal to 1) successfully forecast major market sell-offs and avoid them and 2) predict when markets are about to take off and capitalize on rallies, then their performance results would look fantastic.