“Morganlander, who carries an overweight to neutral position on utilities, believes the ‘long end’ of the yield curve, or the benchmark 10-year Treasury yield, will likely go lower and perhaps even hit 2 percent as economic growth appears to slow. If that occurs, utilities will ‘continue to have a bid underneath it’ and find support,” notes CNBC.
Related: Utilities ETFs In Fed Focus Again
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.
XLU has seen third-quarter inflows of nearly $367 million. VPU has seen modest inflows in the current quarter.
For more information on defensive ETFs, visit our defensive ETF category.