The Vanguard Utilities ETF (VPU) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $5.54 billion, making it one of the largest ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. VPU seeks to match the performance of the MSCI US Investable Market Utilities 25/50 Index before fees and expenses.
The MSCI US Investable Market Utilities 25/50 Index comprises of stocks of large, mid-size, and small U.S. companies within the utilities sector.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.91%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 98.70% of the portfolio.
Looking at individual holdings, Nextera Energy Inc. (NEE) accounts for about 12.41% of total assets, followed by Duke Energy Corp. (DUK) and Southern Co. (SO).
The top 10 holdings account for about 53.75% of total assets under management.
Performance and Risk
The ETF has lost about -2.33% and it's up approximately 8.38% so far this year and in the past one year (as of 07/22/2022), respectively. VPU has traded between $139.14 and $166.95 during this last 52-week period.
The ETF has a beta of 0.48 and standard deviation of 25.59% for the trailing three-year period, making it a medium risk choice in the space. With about 67 holdings, it effectively diversifies company-specific risk.