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Utility ETF (XLU) Hits New 52-Week High

ByZacks Investment Research
Published 06/06/2016, 07:15 AM
Updated 10/23/2024, 11:45 AM
SO
0.66%
DUK
2.11%
NEE
2.05%
XLU
0.02%

For investors seeking momentum, Utilities Select Sector SPDR ETF (NYSE:XLU) XLU is probably on radar now. The fund just hit a 52-week high, which is up roughly 23.4% 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

XLU focuses on the utility segment of the U.S. market. The fund has a large-cap focus with key holdings in the electric utilities, multi utilities and water utilities segments. XLU charges investors 14 basis points a year in fees and has top holdings in NextEra Energy (NYSE:NEE), Duke Energy (NYSE:DUK) and Southern Company (NYSE:SO) (see all Utilities ETFs here).

Why the Move?

The utilities sector has been an area to watch lately as the stock markets once again gave hints of instability which in turn gave a boost to the safer securities. Worries over much weaker-than-expected job numbers in May and Brexit votes turned market sentiments shaky.

Since the utility sector is non-cyclical in nature, the space has been a winner in recent times. Also, a safe haven bid has dragged down U.S. Treasury bond yields, leading income-starved investors to eye high-yielding utility ETFs like XLU.

More Gains Ahead?

Currently, XLU has a Zacks ETF Rank #3 (Hold) so it is hard to oversee its future returns one way or another. However, the fund has a positive weighted alpha of 20.60. A positive weighted alpha hints at more gains.


SPDR-UTIL SELS (XLU): ETF Research Reports

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Zacks Investment Research

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