Utility ETFs  may be an appropriate investment if you’re looking for non-cyclical or defensive investments. Demand for gas, electricity and water utilities tends to be consistent throughout market cycles and therefore leads to consistent dividend yields. There are 19 utility ETFs on the market to choose from. Rebecca Kern for US News & World Report has a way to differentiate the funds that will fit your needs:

• The role within your portfolio matters: A utility fund is used for growth and income through dividends. Since utility funds are sector funds, they should be used to diversify a portfolio but should not be a core holding. [Why utility funds are making a comeback.]
• Why ETFs are preferred: One of the main differences between utilitiy mutual funds and ETFs is that ETFs can be traded throughout the day. Diversified utility ETFs tend to be slightly more stable since they follow an index of primarily regulated utilities, whereas actively managed utilities mutual funds can be slightly more volatile since they sometimes invest in unregulated power companies and telecoms.
• Bull and bear markets: Investors gravitate to safer and more defensive stocks, such as regulated utilities, during down markets, and utilities tend to be just like this. The fact that utility ETFs charge less for their expense ratios than mutual funds make the case for using them stronger. [Can utility ETFs aid your portfolio?]
• Interest rate risk: The rising and falling of interest rates make high-yielding stocks, including many utilities, more or less attractive, and utility ETFs are sensitive to interest rates. Typically, when interest rates are low and cash investments like money market funds aren’t yielding much, investors search for higher-yielding investments, such as utilities stocks, and vice-versa.[Can a utility ETF be a proxy?]

Watch the 200-day moving average; several utility ETFs are below this point. [More on trend following.]

For more stories about utilities, visit our utilities category. Among the many funds you can choose from include:

• Vanguard Utilities (NYSEArca: VPU)

• iShares Dow Jones U.S. Utilities (NYSEArca: IDU)

• iShares S&P Global Utilities (NYSEArca: JXI)

In 2009, utility ETFs were the weakest performers among the 21 U.S.-stock categories that Morningstar tracks, says Dale Buss for The Wall Street Journal. The average return was 18%, while the S&P gained more than 26%.

While the sector may underperform for some time, if analysts are correct, utility ETFs are hugely attractive to conservative investors looking for high yields. As of late December, the median yield of 26 funds was 2.9%. The median yield for large-cap blend funds was 1.2%. [Utility ETFs as energy proxies.]

Meanwhile, Google (NYSE: GOOG) wants to further extend its reach. The search engine behemoth has begun to seek regulatory approval from the Federal Energy Regulatory Commission to become an electricity marketer, essentially giving it the authority to buy and sell bulk power at market prices, just the way large utilities and energy traders do. [Will this move help utility companies rebound?]

The company made the request through its Google Energy LLC subsidiary, and claims that this move will help it better manage supplies for its own operations and give it greater access to renewable energy sources, reports Rebecca Smith and Jessica Vascellero for The Wall Street Journal. [A utility investment is a good defense for a portfolio.]

The move offers an indication of just how much electricity large tech firms now consume in order to run their sprawling networks of servers and mainframes. It is common for large centers run by Internet companies to consume 30 to 50 megawatts of energy capacity, says an insider. Based on an estimate of 24 large data centers, Google’s energy need would be roughly equivalent to the output of two large conventional power plants.

For more stories about utility ETFs, visit our utility category.

• Select Sector SPDR Utilities (NYSEArca: XLU)

• iShares Dow Jones U.S. Utilities (NYSEArca: IDU)

• iShares S&P Global Utilities (NYSEArca: JXI)

Preliminary figures show that the Dow Jones U.S. Utilities Index is the best performer for December, reports Kate Gibson for MarketWatch. Some analysts view the move into defensive areas like utilities and telecoms as less to do with economic uncertainty and more to do with fund managers hanging onto year-end profits. [Defense ETFs you can use.]

Analysts note that this short-term burst in defensive stocks won’t last, and by the new year, investors will go back to riskier selections.

According to utility fund manager Maura Shaughnessy of MFS Investment Management, the utilities sector has outperformed eight other major market segments in the past month, writes Aaron Pressman for Reuters. For the year, however, utilities have been one of the lower performers as compared to the major sectors.

Shaughnessy is also looking into foreign utilities companies, which trade at lower price to earnings ratios and have freer cash flows than similar U.S. operators. “Midstream producers” are also doing well with their ability turn a sizable profit by processing natural gas into products like ethane and propane, which prices are more tied to oil. She is less enthusiastic about natural gas producers who have expanded operations while prices are still so low. [Utility ETFs: A proxy to play energy?]

For more information on utilities, visit our utilities category.

• Select Sector SPDR Utilities (NYSEArca: XLU): up 11.2% yer-to-date

• iShares Dow Jones U.S. Utilities (NYSEArca: IDU): up 13.0% year-to-date

• Vanguard Utilities ETF (NYSEArca: VPU): up 11.1% year-to-date

• iShares S&P Global Utilities (NYSEArca: JXI): up 6.1% year-to-date

Max Chen contributed to this article.

A new “smart grid” industry is coming about and First Trust/Clean Edge Smart Grid ETF (NasdaqGM: GRID) aims to be the first to target the emerging sector, according to Maureen Brody for Ignites. GRID seeks to reflect the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index, which includes companies engaged in all components of the smart grid. (More plays for Obama’s energy plan).

The fund will have a higher weighting, around 80%, for companies that are smart grid “pure plays” and a lower weighting, about 20%, for big companies that only have a smaller vested interest in the smart grid enterprise.

The ETF is made up of 29 companies. Companies are required to have a minimum float-adjusted market capitalization of $100 million and a three-month average daily trading volume of $500K.

The top 10 holdings include: SMA Solar Technology AG, 11.6%; Schneider Electric S.A., 9.0%; NGK Insulators, 7.4%; ITC Holdings Corp. (NYSE: ITC), 7.3%; Quanta Services Inc. (NYSE: PWR), 7.2%; Itron Inc. (NasdaqGS: ITRI), 4.3%; Echelon Corporation (NasdaqGM: ELON), 3.9%; EnerNOC, Inc. (NasdaqGM: ENOC), 3.8%; American Superconductor Corporation (NasdaqGS: AMSC), 3.6%; Power-One Inc. (NasdaqGM: PWER), 3.6%. (“Smart Grid” plans power up tech sector).

For more information on utilities, visit our utilities category. The evolution of the smart grid can also be played with other utility ETFs, including:

• iShares Dow Jones U.S. Utilities (NYSEArca: IDU): up 4.2% year-to-date

• Vanguard Utilities ETF (NYSEArca: VPU): up 3.4% year-to-date

• iShares S&P Global Utilities (JXI): up 2.0% year-to-date

Max Chen contributed to this article.

Among the utilities banding together include New Jersey’s Public Service Enterprise Group (NYSE: PEG), FPL (NYSE: FPL) and PNM Resources (NYSE: PNM). On top of that, some retailers have joined in, including The Gap (NYSE: GPS); Apple (Nasdaq: AAPL) and PG&E (NYSE: PCG) left the Chamber and Nike (NYSE: NKE) has quit the board.

Cassandra Sweet for The Wall Street Journal reports that the new group is formed by utility companies across the United States. The goal is for Congress to enact a strong climate-change  legislation, and as one CEO puts it, it’s not about just a few associations saying “stop this.” (10 ways to play Obama’s energy plan).

Today, 10 of the 12 Democrats on the Senate Environment and Public Works Committee supported the measure to reduce U.S. greenhouse emissions through a cap-and-trade bill. Simon Lomax for Bloomberg reports that Senate Democrats won approval over Republicans, who feel the plan is being rushed.

For more stories about utilities, visit our utility category.

• iShares Dow Jones U.S. Utilities (NYSEArca: IDU): up 2% year-to-date;  PEG 3.6%; FPL 4.5%; PCG 3.6%

• Vanguard Utilities ETF (NYSEArca: VPU): up 0.9% year-to-date; FPL 5.2%; PCG 3.5%

• iShares S&P Global Utilities (JXI): down 1% year-to-date; FPL 2.3% FPL; PCG 1.7%

• PowerShares Dynamic Utilities (NYSEArca: PUI): down 4.9% year-to-date; FPL 4.6%

• iShares S&P Global Nuclear Energy Index (NYSEArca: NUCL): up 30.6% year-to-date; FPL 5%

• PowerShares Dynamic Retail (NYSEArca: PMR): up 20.8% year-to-date; GPS 5.7%

The storm this weekend caused a wide disruption in power and tore through homes, streets and public infrastructures, reports the Associated Press.

Electrical utilities, and the companies which provide them, has a good week last week, but are related ETFs due for a short circuit?

A slowdown within electrical utilities is evidenced by falling momentum and volume indicators, and the rally has been signaled to an end by transitioning into bear market territory, as technical analysis is showing, reports Michael Kahn for Barrons.

Related ETFs:

• Energy Select Sector SPDR (XLU), down 16.1% year-to-date
• iShares S&P Global Utilities Sector Index (JXI), down 20.5% year-to-date
• iShares Dow Jones US Utilities Sector Index (IDU), down 16.4% year-to-date
• Vanguard Utilities (VPU), down 15.7% year-to-date