Utilities tend to be one of the most correlated sectors to the bond market because of the high fixed-cost nature of providing electricity and ongoing infrastructure maintenance, which generally must be financed through debt. [Lower-Risk Stock ETFs]
What this means is that the direction of interest rates is perhaps one of the most important determinants to utilities outperforming broader markets. While it’s a boring sector and not as exciting as silver or gold miners, slow and steady can win the race when entering periods of deflationary/recessionary scares.
Disclosure: The author, Pension Partners, LLC, and/or its clients may hold positions in securities mentioned in this article at time of writing. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.
