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Should You Invest in the Utilities Select Sector SPDR ETF (XLU)?
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Looking for broad exposure to the Utilities - Broad segment of the equity market? You should consider the Utilities Select Sector SPDR ETF (XLU - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
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 State Street Global Advisors. It has amassed assets over $16.52 billion, making it the largest ETF attempting to match the performance of the Utilities - Broad segment of the equity market. XLU seeks to match the performance of the Utilities Select Sector Index before fees and expenses.
The Utilities Select Sector Index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index.
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 2.89%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 100% of the portfolio.
Looking at individual holdings, Nextera Energy Inc. (NEE - Free Report) accounts for about 16.38% of total assets, followed by Duke Energy Corporation (DUK - Free Report) and Southern Company (SO - Free Report) .
The top 10 holdings account for about 59.96% of total assets under management.
Performance and Risk
Year-to-date, the Utilities Select Sector SPDR ETF has gained about 1.18% so far, and is up about 5.02% over the last 12 months (as of 01/16/2023). XLU has traded between $61.52 and $78.12 in this past 52-week period.
The ETF has a beta of 0.50 and standard deviation of 26.84% for the trailing three-year period, making it a medium risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Utilities Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLU is an excellent option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Fidelity MSCI Utilities Index ETF (FUTY - Free Report) tracks MSCI USA IMI Utilities Index and the Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index. Fidelity MSCI Utilities Index ETF has $2.14 billion in assets, Vanguard Utilities ETF has $5.72 billion. FUTY has an expense ratio of 0.08% and VPU charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the Utilities Select Sector SPDR ETF (XLU)?
Looking for broad exposure to the Utilities - Broad segment of the equity market? You should consider the Utilities Select Sector SPDR ETF (XLU - Free Report) , a passively managed exchange traded fund launched on 12/16/1998.
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 State Street Global Advisors. It has amassed assets over $16.52 billion, making it the largest ETF attempting to match the performance of the Utilities - Broad segment of the equity market. XLU seeks to match the performance of the Utilities Select Sector Index before fees and expenses.
The Utilities Select Sector Index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index.
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 2.89%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 100% of the portfolio.
Looking at individual holdings, Nextera Energy Inc. (NEE - Free Report) accounts for about 16.38% of total assets, followed by Duke Energy Corporation (DUK - Free Report) and Southern Company (SO - Free Report) .
The top 10 holdings account for about 59.96% of total assets under management.
Performance and Risk
Year-to-date, the Utilities Select Sector SPDR ETF has gained about 1.18% so far, and is up about 5.02% over the last 12 months (as of 01/16/2023). XLU has traded between $61.52 and $78.12 in this past 52-week period.
The ETF has a beta of 0.50 and standard deviation of 26.84% for the trailing three-year period, making it a medium risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Utilities Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLU is an excellent option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Fidelity MSCI Utilities Index ETF (FUTY - Free Report) tracks MSCI USA IMI Utilities Index and the Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index. Fidelity MSCI Utilities Index ETF has $2.14 billion in assets, Vanguard Utilities ETF has $5.72 billion. FUTY has an expense ratio of 0.08% and VPU charges 0.10%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.