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Investors Rotate Away from Utilities ETFs

tlydon@globaltrend.com (Tom Lydon)

Many of last year’s top-performing exchange traded funds are the laggards so far in 2012 and utilities ETFs are a prime example of the reversal.

Utilities Select Sector SPDR ( XLU ) was down 3.4% year to date as of Jan. 23, compared with a 4.8% gain for the S&P 500, according to Morningstar. The fund rose nearly 20% in 2011 as investors flocked to more stable sectors and dividend payers. [Utilities ETFs Fall as Investors Embrace Riskier Sectors]

The utilities ETF has dipped below its 50-day moving average after ending 2011 on a high note. The fund saw volume spike on Monday, a signal that investors may be rotating away from the utilities sector following a strong run.

Utilities Select Sector SPDR has experienced notable outflows over the past week, according to ETF Channel.

The fund has a 30-day SEC yield of 4%. Top holdings are Southern Co., Dominion Resources, Exelon Corp. and Duke Energy.

Other ETFs tracking the sector include Vanguard Utilities ( VPU ), iShares DJ US Utilities ( IDU ), First Trust Utilities AlphaDEX Fund ( FXU ) and Rydex S&P 500 Equal Weight Utilities ETF ( RYU ). They are all in negative territory to start the year.

Utilities Select Sector SPDR