For investors seeking momentum, iShares U.S. Utilities ETF IDU is probably on radar now. The fund just hit a 52-week high and is up about 17.8% from its 52-week low price of $123.24/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:
IDU in Focus
This ETF provides exposure to the utilities sector with key holdings in electric utilities and multi utilities. It is concentrated on the top firm – Nextera Energy NEE – with double-digit exposure, while other firms hold no more than 7.5% of assets. IDU charges 43 bps in annual fees (see: all the Utilities ETFs here).
Why the Move?
The utility sector has been an area to watch lately given the bouts of volatility and uncertainty that bode well for the utility stocks. Being the low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment or one that is unaffected by economic cycles and politics. Additionally, utilities offer solid dividend payouts and excellent capital appreciation over the longer term.
More Gains Ahead?
Currently, IDU 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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iShares U.S. Utilities ETF (IDU): ETF Research Reports
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