Ten-year Treasury yields inched lower Friday, but that decline did little to dent the benchmark yield’s recent surge. Entering Wednesday, 10-year yields had surged 28% in the past 10 days, the second-biggest 10-day rally for those yields over the past 45 years.
In predictable fashion, those rising yields have pressured an array of beloved rate-sensitive asset classes, including the utilities sector, real estate investment trusts (REITs) and exchange traded funds heavy on those groups.
That is a departure from 2014 when the utilities sector was easily the best performer in the S&P 500. Although rising Treasury yields and slumping utilities stocks have not been enough to sour investors on some of last year’s top-performing dividend ETFs, which, not surprisingly, feature substantial allocations to the utilities sector. [Investors Sticking With Utilities-Heavy Dividend ETFs as Sector Slides]
In 2014, S&P 500 companies issued a record $900 billion in total buybacks and dividends, compared to the previous record $846 billion in 2007, and second-place $787 billion in 2013, reports John Melloy for CNBC.
Investors can maintain exposure to the theme of rising shareholder rewards even as interest rates increase with a slew of ETFs. We take a look at some of those funds here, which, hint, hint, are lightly allocated to rate-sensitive sectors.