Utilities have been a casualty of the broad equity sell-off the market has experienced lately, even lagging yesterday in what was a “buy the dip” effect in other sectors.
The largest fund in the space, XLU (SPDR Utilities Select, Expense Ratio 0.18%) has seen more than $180 million leave the fund in recent sessions, on very heavy trading volume and it is not alone, with IDU (iShares U.S. Utilities, Expense Ratio 0.46%) seeing >$600 million vacate the fund during the same time frame.
IDU trading volume has been elevated as well as the selling in the sector has accelerated “post” the FOMC rate decision from last week. XLU still has $6.2 billion in assets under management while IDU holds about $1.7 billion, so the outflows are notable and substantial but not necessarily a death knell for the sector.
Other funds that are often in the traffic in this space among ETF portfolio managers are the $1.7 billion VPU (Vanguard Utilities, Expense Ratio 0.14%) and the $626 million FXU (First Trust Utilities AlphaDEX, Expense Ratio 0.70%).
There are more than a dozen other ETFs categorized in the broader “Utility” space and a common theme here is also that of a related segment, “Infrastructure.” For example, IGF (iShares S&P Global Infrastructure,
Expense Ratio 0.47%) now has about $973 million in assets under management and is the most well-known ETF specific to the infrastructure segment in the marketplace currently. Does it trade a ton of daily volume, no, (128,000 shares), but it seems to be utilized out there as a longer term hold by portfolio managers whom likely are attracted to yield, and the fund has a 2.54% yield currently via its 38.90% weighting to the Utility sector.