An ETF tied to the interest rate-sensitive Utilities sector has seen extraordinary trading action in recent sessions particularly early last week, as IDU (iShares DJ U.S. Utilities, Expense Ratio 0.48%) saw $331 million flow out via redemption activity.
The fund itself typically averages about 221,000 shares on a daily basis, but traded more than 6 million shares in one session alone recently.
IDU currently has about $709 million in assets under management, so these flows are certainly substantial in terms of the overall size of this fund, and worth noting.
IDU is the third largest ETF in terms of asset size in the “Utilities Equity” category, following VPU (Vanguard Utilities, Expense Ratio 0.14%) and XLU (SPDR Utilities Select Sector, Expense Ratio 0.18%). Both XLU and IDU have now net lost assets year to date (-$234 million and $-248 million respectively) and it is possible that as bond market interest rates have risen sharply recently, that allocators have been shifting away from the sector which is traditionally owned and followed thanks to steady dividend yield.
It is also worth pointing out that IDU for instance has shed more than 8% from peak to current levels since the beginning of May, and has traded as low as $90.15 on an intraday basis just in the past several weeks. Top holdings of IDU are currently DUK (8.21%), SO (6.50%), D (5.51%), NEE (5.39%), and EXC (4.97%) and about forty seven percent of the portfolio’s weighting is made up from the top ten securities in the index.