No sector is as negatively correlated to rising interest rates as utilities, meaning the longer the Fed resists raising interest rates, the longer high-yielding utilities stocks and ETFs remain compelling destinations for yield-starved investors.
“Funds currently have record underweight positioning in staples and utilities — two traditionally defensive sectors — and near-record lows in telecom, according to a new report from Bank of America Merrill Lynch’s U.S. equity and quantitative strategy team,” according to CNBC.
Year-to-date, investors have pulled $563.3 million from XLU.
For more information on defensive ETFs, visit our defensive ETF category.