High-flying technology names might get all the fanfare in the equities market, but slow-and-steady plays like utilities deserve a careful look. While they might not garner the same attention, there’s still something to be said about steady gains via funds like the Direxion Daily Utilities Bull 3X Shares (UTSL).

UTSL seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Utilities Select Sector Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.

The index includes domestic companies from the utilities sector which includes the following industries: electric utilities; multi-utilities; water utilities and etc. And with its triple leverage, the fund gives short-term traders the dynamic ability to:

  • Magnify short-term perspective with daily 3X leverage;
  • Go where there’s opportunity, with bull and bear funds for both sides of the trade; and
  • Stay agile with liquidity to trade through rapidly changing markets

The fund’s top holding is NextEra Energy, which recently garnered praise from The Economist. As clean energy initiatives like renewable energy sources proliferate, UTSL stands to gain.

“As America’s oil industry flails, its most valuable utility, NextEra, has soared,” The Economist article said. “It is already the world’s top generator of wind and solar electricity.”

UTSL Chart

“The utilities sector is often looked to by active traders for its relative stability when compared to other sectors,” wrote Casey Murphy in an Investopedia article. “Strong levels of recurring revenue combined with high barriers to entry also make this group one of the go-to sectors for long-term investors. Unsurprisingly, sectors such as technology and health care have dominated the headlines in recent weeks, but chart patterns across the utilities sector, such as those discussed below, are suggesting that prices could be headed higher over the final weeks of 2020.”

The MSCI ACWI Multi-Utilities Index, is starting to gain in short-term strength with the 50-day moving average rising above the 200-day moving average. Is this momentum a sign of more gains to come through the rest of 2020?

^MSACWIMUU Chart

“While most of the market attention has gone to companies in the technology and health care sectors, the slow-and-steady nature of the utilities sector suggests that this group could be the one to watch over the final weeks of 2020,” the article concluded.

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