Reaves Asset Management is testing the exchange traded fund waters after launching the first actively managed ETF to cover the utilities sector.
According to a press release, the Reaves Utilities ETF (NasdaqGM: UTES) will invest in utilities without regard to market cap or dividend yield but seeks to deliver risk-adjusted total returns, employing a relative value strategy. UTES has a 0.95% expense ratio.
The active utilities ETF will try to outperform other utility funds by taking advantage of opportunities presented by differing regulatory, demographic, economic and climate trends in the U.S.
Utility company holdings will cover areas like electrical distribution and transmission, gas distribution, water distribution, independent power producers and YieldCos, along with vertically integrated and traditional utilities.
“Utilities provide an element of stability in investment portfolios due to their defensive nature, steady earnings, dividend growth, and quarterly dividend payments,” John Bartlett, UTES’ co-portfolio manager at Reaves Asset Management, said in a press release. “Our active approach focuses on strong risk-adjusted total returns as we feel it’s the best way to deliver superior value to our investors over the long term.”
The W.H. Reaves & Company, Inc. (dba Reaves Asset Management) will manage the fund based on quantitative and qualitative procedures. The firm, which was founded in 1961, specializes in utilities and energy infrastructure.
Specifically, the investment team will gauge a utility company’s management team and footprint in the overall industry. The fund managers will evaluate industry prospects and regulatory climate. Moreover, managers will consider company financials, valuations and other technical aspects.