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Vanguard Utilities ETF Powering Up as Rates Rise

Tim Smith

The major stock indexes took a pummeling last week over fears that interest rates are rising too quickly. Surprisingly, the utilities sector, which typically moves lower when interest rates rise due to higher funding costs, has outperformed the broader market in October 2018. While the Standard and Poor's 500 index (S&P 500) is down 5% so far this month, the Vanguard Utilities ETF ( VPU) – the poster child of U.S. utilities exchange-traded funds (ETFs) – is trading flat to slightly higher over the same period, and the ETF is up 6.14% over the past three months.