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Utilities ETF (FXU) Hits New 52-Week High

Sweta Killa

For investors seeking momentum, First Trust Utilities AlphaDEX Fund FXU is probably on the radar now. The fund just hit a 52-week high and is up 15.4% from its 52-week low price of $27.58/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

FXU in Focus

This product targets the utilities segment of the broad stock market and follows the StrataQuant Utilities Index. It has key holdings in electric utilities, telecommunications services and multi utilities. The ETF charges 63 basis points in annual fees (see: all the Utilities ETFs here).

Why the Move?

The utility sector has been an area to watch lately given the fear of fast-spreading coronavirus that has led to global economic slowdown and triggered a sharp sell-off in the broad stock market. This has, in turn, raised the appeal of utility stocks. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment. Additionally, utilities offer solid dividend payouts and excellent capital appreciation over the long term.

More Gains Ahead?

Currently, FXU has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.

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First Trust Utilities AlphaDEX ETF (FXU): ETF Research Reports
 
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