For investors seeking momentum, Utilities Select Sector SPDR (XLU Quick QuoteXLU - Free Report) is probably on radar. The fund just hit a 52-week high and is up 21.8% from its 52-week low price of $56.72/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

This product targets the utilities segment of the broad stock market and tracks the Utilities Select Sector Index. It has key holdings in electric utilities and multi utilities. The product charges 12 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 volatility and uncertainty in the stock market. The Delta variant of COVID-19 is spreading rapidly across the world, leading to concerns over the sustained global economic recovery. Additionally, a spate of the latest data including retail sales and homebuilder confidence has been weighing on sentiments. This has raised the appeal of utility stocks. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment. Additionally, utilities offer solid dividend payouts and excellent capital appreciation over the long term.

More Gains Ahead?

Currently, XLU 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.