Related: Investors Pay up for Protection With Utilities ETFs
Given the utilities’ dividend association, the sector is also found in many dividend-focused ETF strategies. For instance, the iShares Select Dividend ETF (NYSEArca: DVY) is the second largest dividend-related ETF on the market, with $15.2 billion in assets under management, and the ETF includes a hefty 31.7% tilt toward utilities.
DVY could see further upside because the Fed may not be able to raise interest rates as much as previously planned this year, which would keep pressure off utilities and consumer staples names.
“Many might be loathe to touch the Utilities sector given concerns about high valuation, or interest rate normalization just beginning, and some investors feel that yields on the long bond should go nowhere but higher. Yet precisely the opposite is happening, and at least technically, it looks like another few months of outperformance and above-average relative strength is likely out of this group,” adds See It Market.
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Utilities Select Sector SPDR
Tom Lydon’s clients own shares of DVY.