“We like a bearish play on XLU because we expect it will respond flat to a rising market or decline in a bearish one as more earnings news streams in over the next few days. Either risk appetite is high and overvalued utilities will fall as investors snag financials, or traders will sell the market, which should support profit-taking momentum within the ‘safety’ sectors in April,” according to InvestorPlace.
Some investors see opportunity with rate-sensitive assets such as XLU and real estate ETFs, noting that 10-year yields are overbought and sentiment against the likes of XLU is at bearish extremes, which could create opportunity from the long side with the utilities sector. [Rethinking Rate Sensitive ETFs]
Most investors view utilities as a reliable, income-generating asset that exhibit some bond-like characteristics. As interest rates declined, the sector appealed to many income investors for its relatively higher yields. [Crunch Time for Rate-Sensitive ETFs]
Utilities Select Sector SPDR