It's Getting Pricey to Hedge a Big Dividend ETF

Some market observers see growing risks to utilities stocks and ETFs, a group usually prized for being less risky than other parts of the equity market. The downside is that utilities stocks are trading at frothy valuations, prompting some concern by market observers over how long the defensive rally can last. The utilities sector is trading at heightened valuations after investors plunged into the defensive play in search of yield and safety in an environment of historically low yields, slow growth and geopolitical uncertainty.

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“While the iShares dividend ETF taken in more than $1 billion this year, the pace of inflows has slowed. It’s absorbed just $17 million since the start of August, including $22 million of outflows over the past five trading days,” according to Bloomberg.

For more news and strategy on the Dividend ETF market, visit our Dividends category.

iShares Select Dividend ETF

Tom Lydon’s clients own shares of DVY.