“Long viewed as bond substitutes, utilities tend to generate stable cash flows and attractive yields,” writes Morningstar analyst Robert Goldsborough. “There is a long-standing relationship between interest rates and utilities’ performance relative to the rest of the market. When rates rise or investors fear higher rates, utilities tend to underperform. During a low-rate environment or when rates are falling, utilities tend to outperform.”
Investors interested in tracking the utilities space have a number of ETF options available.
Utilities ETFs:
- Utilities Select Sector SPDR (NYSEArca: XLU)
- Vanguard Utilities ETF (NYSEArca: VPU)
- First Trust Utilities AlphaDEX Fund (NYSEArca: FXU)
- iShares U.S. Utilities ETF (NYSEArca: IDU)
- Fidelity MSCI Utilities Index ETF (NYSEArca: FUTY)
- Guggenheim S&P Equal Weight Utilities ETF (NYSEArca: RYU)
- PowerShares DWA Utilities Momentum Portfolio (NYSEArca: PUI)
- iShares Global Utilities ETF (NYSEArca: JXI)
- PowerShares S&P Small Cap Utilities Portfolio (NasdaqGM: PSCU)
- SPDR S&P International Utilities Sector ETF (NYSEArca: IPU)
- WisdomTree Global ex-US Utilities Fund (NYSEArca: DBU)
- John Hancock Multifactor Utilities ETF (NYSEArca: JHMU)
- Reaves Utilities ETF (NasdaqGM: UTES)
Leveraged/inverse ETFs:
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