Both funds have gained almost 6% over the past three months as investors sought out safe, defensive plays with decent yields. XLU has a 3.68% 12-month yield and VPU has a 3.46% yield.
Utilities stocks are known for operating stable businesses with predictable dividend returns, qualities that investors like during rough market conditions. For instance, the sector outperformed the broader market in May when the Eurozone troubles first started up this year.
If the sector begins to underperform the overall market, it may be a positive sign for stocks since it would indicate that investors are beginning to move away from defensive plays and take on riskier assets.
On Wednesday, utilities sector ETFs were under the spotlight after jumping 5% on heavy volume in about 30 minutes of “unusual activity,” with VPU trading volume about 77 times the average.
Other utility ETF options include:
- iShares Dow Jones U.S. Utilities Index Fund ETF (NYSEArca: IDU): 3.21% yield.
- iShares S&P Global Utilities Sector Index Fund ETF (NYSEArca: JXI): 4.39% yield.
- First Trust Utilities AlphaDEX Fund ETF (NYSEArca: FXU): 2.53% yield.
- Guggenheim S&P Equal Weight Utilities ETF (NYSEArca: RYU): 3.24% yield.
For more information on the utilities sector, visit our utilities category.
Max Chen contributed to this article.