Categories: Exchange Traded Funds (ETFs)Oil & Gas

This Fund Could Give Investors Utility

Last but not least in our series on the sector-specific exchange-traded funds (ETFs) offered by SPDR is SPDR Select Sector Utilities ETF (XLU). The utilities sector of the S&P 500, where this fund focuses, includes companies involved in electric utilities, gas utilities, energy traders and similar businesses.

View the current price, volume, performance and top 10 holdings of XLU at ETFU.com.

More than most industries, utilities companies tend to carry large debt loads. As a result, interest rates impact them more heavily. Due partly to this situation, the sector has experienced some turmoil this year. XLU also may experience more ups and downs than other sector funds due to investing in fewer companies.

So far this year, XLU has underperformed the S&P 500 greatly as fears of a Fed rate hike likely hurt investor sentiment towards utilities. The fund is down 9.76% in 2015. It does, however, pay a higher yield, 3.5%, than most sector funds and it has about the same low expense ratio, 0.14%, as its peers. XLU has about $5.6 billion in assets under management.

This fund invests 59.8% of its assets in its top 10 holdings, making it less diversified than many other ETFs. The largest holdings are NextEra Energy Inc. (NEE), 8.78%; Duke Energy Corp. (DUK), 8.34%; Southern Co. (SOJA), 7.90%; Dominion Resources Inc. (D), 7.52%; and American Electric Power Company Inc. (AEP), 5.29%.

People always will spend money on utilities. When that stability is again reflected by investment in the utilities sector, SPDR Select Sector Utilities ETF (XLU) may be worth a look.

Exclusive ETF Talk: Another Golden Opportunity

I’ll highlight another fund for your consideration next week,.

Remember to look for the current price, volume, performance and top 10 holdings of XLU at ETFU.com.

If you want my advice about buying and selling specific ETFs, including appropriate exit points, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a consumer-based ETF. I also invite you to comment in the space provided below.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/