Furthermore, the fund managers take advantage of both regulatory and regional variances by overweighting utilities in areas with relatively more attractive population growth, weather, and industrial activity. The Reaves team can also evaluate operating risks arising from non-core activities and adapt to risks with quick changes to the portfolio.
“Our ability to invest in companies regardless of their inclusion in an index is a key aspect of our Fund’s active strategy,” UTES’ co-portfolio manager Jay Rhame said in a note. “By omitting certain indexed stocks and adding others not in an index, we seek to avoid some of the downside that a passive index-tracking fund captures in full and recover upside from other areas.”
The investment team will gauge a utility company’s management team and footprint in the overall industry. The fund managers will evaluate industry prospects and regulatory climate. Moreover, managers will consider company financials, valuations and other technical aspects.
UTES’ top holdings include Nextera Energy 13.6%, Sempra Energy 8.1%, PG&E Corp 7.9%, Nisource 5.3%, Nextera Energy Partners 5.1%, Infrareit 5.1%, American Water Works 4.9%, DTE Energy Company 4.9%, Eversource Energy 4.7% and WEC Energy Group 4.6%.
For more information on the utilities sector, visit our utilities category.