“It will have a negative impact on their ability to raise capital,” Grabelsky added. “Regulators will ask, ‘Do you really need all that new transmission when there’s no demand growth?’ There’s the potential for stranding assets.”
Solar ETFs have been among the best performing funds year-to-date. The Guggenheim Solar ETF (NYSEArca: TAN) has gained over 60% so far this year.
The Utilities Select Sector SPDR (NYSEArca: XLU), the largest utilities ETF by assets, sank 3.5% in the second quarter while the iShares U.S. Utilities ETF (NYSEArca: IDU) dropped almost 2.4%. Utilities have been underperforming the broader markets as investors shifted over to riskier bets to join the broader equity rally. [Utilities ETFs Have Recovered Almost All of May/June Swoon]
For more information on the utilities sector, visit our utilities category.
Max Chen contributed to this article.