Tuesday was not much more kind to utilities ETFs. The eighth-, ninth- and tenth-worst non-leveraged ETFs on the day were the Vanguard Utilities ETF (NYSEArca: VPU), XLU and IDU.
While volume was not unusual in those ETFs, FXU lost 1.2% on turnover that was more than five times its daily average on Tuesday. Utilities ETFs have fought off rising rates since the start of this month. FXU. VPU and XLU are up an average of 1% while 10-year Treasury yields are higher by 2.8%.
Higher interest rates lead to higher borrowing costs for capital intensive utilities , often prompting speculation about the ability of the companies to continue paying or increasing dividends. When rates spiked roughly 60 points in the second quarter, utilities ETFs were the worst-performing sectors ETFs.
Utilities Select Sector SPDR
