Tis the season to see volatility as U.S. equities have given investors a roller coaster ride of market oscillations the past two months, but as investors look to duck under safe-haven assets, one place to seek refuge is utilities.
Needless to say, the last couple of months haven’t been kind to U.S. stocks as the technology sector, in particular, has gotten trounced. If volatility continues to fuel the rest of the year and beyond, the markets can expect to see more value-oriented plays as investors become more defensive with their portfolios and continue cycling out of growth-fueled investments.
This could include a continued shift towards the utilities sector, and as such, here are three ETFs investors should consider, especially in today’s volatility.
Related: ETF of the Week: Pacer CFRA-Stovall Equal Weight Seasonal Rotation ETF (SZNE)
1. First Trust Utilities AlphaDEX ETF (NYSEArca: FXU)
FXU seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the StrataQuant® Utilities Index. The fund will normally invest at least 90% of its net assets (including investment borrowings) in common stocks that comprise the index.
The index is a modified equal-dollar weighted index designed by IDI to objectively identify and select stocks from the Russell 1000® Index in the utilities sector that may generate positive alpha relative to traditional passive-style indices through the use of the AlphaDEX® selection methodology. FXU is up 1.5 percent within the last month.
2. JHancock Multifactor Utilities ETF (NYSEArca: JHMU)
JHMU seeks to provide investment results that closely correspond to the performance of the John Hancock Dimensional Utilities Index (the index). The fund normally invests at least 80% of its net assets (plus any borrowings for investment purposes) in securities that compose the fund’s benchmark index.
The index is designed to comprise securities in the utilities sector within the U.S. Universe whose market capitalizations are larger than that of the 1001st largest U.S. company at the time of reconstitution. JHMU is up 4.1 percent in the past month.
3. Invesco S&P 500 Equal Weight Utilities ETF (NYSEArca: RYU)
RYU seeks to track the investment results of the S&P 500® Equal Weight Telecommunications Services & Utilities Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index. The underlying index is an equal-weighted version of the S&P 500® Utilities Index.
Strictly in accordance with its guidelines and mandated procedures, the index provider compiles, maintains and calculates the underlying index, which is comprised of common stocks of companies in the utilities sector and telecommunication services of the S&P 500® Index. RYU has risen 4 percent within the last month.
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