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Utilities ETF (XLU) Hits New 52-Week High

This utilities ETF hit a new 52-week high. Are more gains in store for this ETF?

For investors seeking momentum, Utilities Select Sector SPDR Fund XLU is probably on radar now. The fund just hit a 52-week high. Shares of XLU are up roughly 20.3% from their 52-week low price of $47.37/share.

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

XLU in Focus

The fund tracks the Utilities Select Sector Index, which seeks to represent the utilities sector of the S&P 500 index. It comprises 29 holdings with NextEra Energy Inc NEE occupying the top position (11.57%). The fund charges 13 bps as fees (see: all the Utilities/Infrastructure ETFs here).

Why the move?

The utilities sector of the broad market has been an area to watch lately as stock markets are in a state of turmoil with easing signs of economic activity and rising rate concerns. The last trading session added to the already fragile sentiments with rising political tension in the nation’s capital. A controversial meet between President Trump and Democratic leaders Chuck Schumer and Nancy Pelosi over border security caused hurt investor sentiment, making the safe haven sector a favorable option.

More Gains Ahead?

Currently, XLU has a Zacks ETF Rank #3 (Hold), so it is hard to get a handle on its future returns one way or another. However, many of the segments that make up this ETF do have strong a Zacks Industry Rank, so there is definitely still some promise for those who want to try to ride this surging ETF a little further.  

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