For investors seeking momentum, Utilities Select Sector SPDR (XLU) is probably on radar now. The fund just hit a 52-week high, and is up 21.6% from its 52-week low price of $40.80/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:
XLU in Focus
With AUM of $8.1 billion, this fund provides exposure to a small basket of 31 securities by tracking the Utilities Select Sector Index. It is heavily concentrated on the top 10 holdings at 59.5% of assets. Electric utilities takes the top spot in terms of sectors at 54.8%, closely followed by multi utilities (37.8%). The product charges 14 bps in annual fees (see: all the Utilities ETFs here).
Why the Move?
The utilities sector has been an area to watch lately as the Fed signaled lower rates for some time that raised the appeal for the utilities stocks in search of juicy yields. This is especially true as utilities offer solid dividend payouts and excellent capital appreciation over the longer term. Further, 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 safe haven in turbulent times.
More Gains Ahead?
Currently, XLU has a Zacks ETF Rank #3 (Hold) so it is hard to get a handle on its future returns in one way or the other. However, many of the segments that make up this ETF have strong a Zacks Industry Rank, so there is definitely still some promise for those who want to ride on this surging ETF a little further.
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SPDR-UTIL SELS (XLU): ETF Research Reports
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Utility ETF (XLU) Hits New 52-Week High
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