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“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:

  • ProShares Ultra Utilities (NYSEArca: UPW)
  • ProShares UltraShort Utilities (NYSEArca: SDP)

 

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