The equities markets are in rally mode, breaking new highs, but exchange traded funds tracking boring stocks that exhibit lower volatility have been outpacing the broader market.
Specifically, the utilities are the best performers this year, rising 14.5% on a total return basis year-to-date, compared with the S&P 500’s 6.4% return, reports Caroline Valetkevitch for Reuters.
Broad utilities ETFs, the Utilities Select Sector SPDR (NYSEArca: XLU) and iShares U.S. Utilities ETF (NYSEArca: IDU), are up 13.6% and 13.3% year-to-date, respectively.
Conservative, “low-beta” stocks, or sectors that exhibit low volatility and tend to be less influenced by broad market moves, are picking up steam this year. It suggests that investors are worried about earnings growth and the U.S. economy, especially after U.S. gross domestic product contracted in the first quarter, the first time in three years.
“You see this all over the place – people are still scared,” Richard Bernstein, CEO of Richard Bernstein Advisors, said in the article.. “They’re still more worried about protecting to the downside than accentuating the upside.”