Differing Views on Utilities

On the note of tax reform, the benefit to utilities is muted because, as regulated industry, utilities will be forced to pass cost savings from tax reform onto consumers.

XLU yields about 3.3% on a trailing 12-month, making it and rival utilities ETFs popular alternatives to lower-yielding bond funds. The sector, one of the smallest sector allocations in the S&P 500, is also one of the least volatile.

“Ellinghaus expects a further 7%-9% drop in utility stock prices before valuations look much more attractive in early spring,” according to Seeking Alpha.

Year-to-date, investors have added $87.5 million to XLU.

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