Utilities based stocks have seen a jolt of activity in the past 48 hours with benchmark ETF XLU (SPDR Utilities Select Sector, Expense Ratio 0.18%) seeing a significant jump in trading volume amid upside call buying in the name.
This morning XLU is trading at its highest levels since mid–August and is comfortably above both its 50 and 200 day moving averages. Assets are definitely flowing into the sector lately as well, with XLU pulling in north of $250 million via creation activity in just the past few days (total assets under management is $5.4 billion).
One can simply pull up a chart of any of the leading components in XLU, such as DUK (9.20%), SO (8.04%), NEE (7.24%), D (6.87%), or EXC (5.53%) and there is clearly bullish momentum and heavier trading volume in these names and the sector as we deepen into the month of October. Utilities are typically sought out by managers that are looking to earn dividend yields in portfolios, as the sector has been historically generous in terms of distributing competitive dividend yields.
With Bond interest rates in quick motion this week and falling once again as bond prices have sharply gapped higher, there is clearly money in motion in terms of year end positioning given the interest rate environment now and potentially three months out. XLU for instance currently sports a yield of 3.92%.
Related ETFs that also should be in focus here include VPU (Vanguard Utilities, Expense Ratio 0.14%), IDU (iShares U.S. Utilities, Expense Ratio 0.48%), JXI (iShares S&P Global Utilities, Expense Ratio 0.48%), FXU (First Trust Utilities AlphaDEX, Expense Ratio 0.70%), IPU (SPDR S&P International Utilities Sector, Expense Ratio 0.50%), PUI (PowerShares Dynamic Utilities Portfolio, Expense Ratio 0.60%), and PSCU (PowerShares S&P SmallCap Utilities Portfolio, Expense Ratio 0.29%) to name a few.
XLU is the giant in the Utilities category in terms of assets under management, followed by VPU and IDU which have $1.35 billion and $882 million respectively invested in them currently. The other ETFs that are mentioned here range from $224 million in AUM down to $32 million, so some of these funds may not be on everyone’s radar just yet.
SPDR S&P Utilities ETF
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- Expense Ratio