ETF Trends
ETF Trends

We have seen some profit taking in the U.S. Utilities space, specifically with redemptions evident in XLU (SPDR Utilities Select Sector, Expense Ratio 0.18%) as well as some level of downside put buying.

The fund has seen more than $300 million flow out going into quarter’send, noting that the ETF has as an asset base of about $5.3 billion and XLU is again flirting with multi-year highs after yesterday’s move.

XLU has handily out-performed the broad market as measured by the S&P 500 year to date, so profit taking here perhaps makes sense for tactical managers that may be looking to shift assets into other sectors, especially given the propensity for Utilities to move erratically around Fed rate decisions and in tandem with bond rates which have been exceptionally volatile in the past 72 hours.

Top holdings in XLU are DUK (9.33%), D (8.14%), NEE (7.96%), SO (7.55%), and EXC (5.27%), with these names expected to release quarterly earnings results for the most part in the last week of April into early May. XLU remains the largest Utility focused fund by a wide margin currently, above VPU (Vanguard Utilities, Expense Ratio 0.14%) which holds about $1.5 billion in assets, and other Utility specific funds that should be watched
closely given the selling pressure in XLU include IDU (iShares U.S. Utilities Sector Index, Expense Ratio 0.48%), JXI (iShares S&P Global Utilities, Expense Ratio 0.48%), and FXU (First Trust Utilities AlphaDEX, Expense Ratio 0.70%) to name a few.

While not exclusively “Utility” stock composed in all cases, there are also several interesting funds that track the “Infrastructure” space that have healthy sector allocations to utilities. IGF (iShares S&P Global Infrastructure, Expense Ratio 0.48%) is the largest such fund with approximately $772 million in AUM at the moment.

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