Accessed April 8, 2020. “And while the debt-to-equity ratios on some of XLU’s top holdings like DUK (1.38) and NEE (1.20) are not terrible, they’re not comforting in higher-interest-rate environments.” VPU would be in a similar boat. The yield figure reflects the dividends and interest earned during the period, after the deduction of the fund's expenses, a calculation that is required to be reported by funds to the Securities and Exchange Commission (SEC).. To find the best utilities ETFs, most investors are wise to look for a combination of yield and low expenses. Has the dividend yield increased over time, remained the same from year to year or have there been ups and downs? The table can be resorted by clicking the first row of any column. PUI tracks the Dorsey Wright Utilities Technical Leaders Index, which “is designed to identify companies that are showing relative strength (momentum), and is composed of at least 30 securities from the NASDAQ US Benchmark Index. FKUQX is a team effort: It’s managed by John Kohli, who has been with the fund since 1998, and Blair Schmicker, who joined in 2009. It also should provide investors with a smoother ride than the broader market. What Are the Three Best Utilities ETFs for 2020? Utility companies that provide these services may have an easier time maintaining profit margins in leaner times, compared to companies in other stock market sectors. Learn from industry thought leaders and expert market participants. More diversification makes it easier to manage and balance risk. They invest more than half the fund (55.5%) in electric utilities, with multi-utilities (31.9%) and water utilities (4.7%) making up most of the rest of the fund. While FUTY has some differences with the rival XLU, the dividend yield on the two utility ETFs is comparable as are earnings metrics. Both have their pros and cons when constructing a diversified portfolio. The best utilities ETFs will have a combination of high yield and low expenses. That strategy makes sense because the sector is a large cap-intensive group, but reducing dependency on the sector’s biggest names can payoff from time-to-time. Like XLU, it’s a simple index fund. Each ticker and name links to more detailed data about each fund, including graphs, fund descriptions, details about the fund managers, and other valuable information. Copyright © Disclaimer: By registering, you agree to share your data with MutualFunds.com and opt-in to receiving occasional communications about projects and events. Utilities Sector Equity Funds and ETFs are mutual funds that provide access to a basket of various utilities stocks. The one downside to this actively managed portfolio? BULIX invests a major portion of its assets in equities related to the utility industry. Utility stocks, with their high returns on assets and high dividends, should be considered given that they “tend to do well in late-cycle periods,” Horstmeyer says. Enhance retirement outcomes with helpful tactics. To view the Zacks Rank and past performance of all utilities mutual funds, investors can click here to see the complete list of funds . Which Technology Funds Are Best to Buy Now? Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the sector. Researching various utility funds can help you find the one that’s right for you and your investment goals. Utility funds can also be attractive during a recession or periods of economic decline, since demand for these services tends to hold steady. He also isn’t sweating CNP’s recent underperformance (it’s off 3% year-to-date versus a nearly 18% gain for the sector). Zacks. Utilities Sector Equity Funds and ETFs are mutual funds that provide access to a basket of various utilities stocks. Utility funds do have some risk factors to keep in mind before you invest. Last Updated 11/24/20 “Investors’ demand for exposure to utility stocks typically increases for two main reasons: investors are seeking a high level of income and/or investors are fearful of what the future holds and start defensively positioning their portfolio.”. As more green companies move into the energy space, traditional energy providers may see less demand for their services, which could lead to reduced profits and again, lower dividends for investors. “The dividend yield on the utility sector is especially attractive in this abnormally low-interest-rate environment as the yields on utility stocks exceed the yields on long-term U.S. government debt by a substantial margin,” he says. It’s an outperformer. By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Investors looking to group several utility stocks together to reduce risk have their choice of funds. Electricity, gas and water are considered the most basic of needs, so they’re among the last things people cut even in the worst of economies. Capital appreciation means the fund’s goal is increasing share prices to deliver higher returns to investors. This portfolio of 30 stocks is then weighted by the companies’ momentum scores. Each fund may be in more than one table on our site because they usually have more than one tag associated with them; for instance, a European equity mutual fund may be tagged as “developed markets”, “equity” and “Europe”. The funds feature a wide range of market capitalizations and can focus on the domestic or international markets. Several countries have shown signs of economic weakness, sparking worries about a global recession. IDU is yet another indexed utility ETF – one that splits the difference between XLU and VPU with a 48-stock portfolio of companies that provide electricity, gas and water, as well as a splash of independent power producers. In the quantitative process, stocks are ranked on their growth and valuation features. This is because the demand for essential services such as those provided by utilities remains unchanged even during difficult times. The data that can be found in each tab includes historical performance, the different fees in each fund, the initial investment required, number of holdings, breakdown of weights by each sector and much more. Not all Utilities sector ETFs and mutual funds are created the same.