The Best Undercover ETF to Play the AI Boom - InvestingChannel

The Best Undercover ETF to Play the AI Boom

Proprietary Data Insights

Financial Pros’ Top Utility ETF Searches in the Last Month

Rank Ticker Name Searches
#1 XLU Utilities Select Sector SPDR Fund 16
#2 VPU Vanguard Utilities ETF 3
#3 UTSL Direxion Daily Utilities Bull 3X Shares 2
#4 JXI iShares Global Utilities ETF 1
#5 UTES Virtus Reaves Utilities ETF 1
#ad Adding Color to the Investment Spectrum

Experts’ Top 5 Utility Stock ETFs

AI requires power…a lot of power.

Forecasts call for energy consumption to double in 2024 from 2023, driven by AI and data center needs.

It’s so dire, states now see mothballed nuclear power plants as potential solutions. 

According to our TrackStar data, investors believe utility stocks are the best way to play this trend.

State Street’s XLU ETF is their top choice based on search volume.

At all-time highs, this ETF jumped over 25% year-to-date, not including its nearly 3% dividend yield.

That’s a massive gain for a typically sleepy sector.

But is it the best way to play the AI power boom?

Key Facts About XLU

  • Net assets: $18.6 billion
  • 12-month trailing yield: 2.77%
  • Inception: December 16, 1998
  • Expense ratio: 0.09%
  • Number of holdings: 33

When we think of utilities, we almost always assume electricity. However, utilities cover a broader range of companies, including water and gas.

We’re unaware of any electricity-only utility ETF outside of owning individual companies.

So, if you want diversification, utility ETFs are the way to go.

The XLU is one of the most well-known in the sector. It trades over 11 million shares daily and has weekly option expirations.

The ETF holds 33 of the largest utilities in the U.S. and is weighted by market capitalization.

Holdings

Source: State Street

While electric utilities make up two-thirds of the ETF’s holdings, multi-utilities often generate most of their revenues from electricity.

Sector

Source: State Street

Performance

Utility companies aren’t known for exceptional returns. They typically pay consistent dividends with some but very little capital appreciation.

Funds

Source: State Street

That dynamic has changed recently, as investors are now examining the massive capital projects needed to meet our energy needs.

Competition

While the XLU is the most popular utilities ETF, several others are worth considering, including a leveraged sector ETF.

Assets 

The three passively-managed ETFs all have similar performance. However, the actively managed one has nearly double the 5-year performance total, though it comes with higher fees.

 

Our Opinion 10/10 

Given the similarities between the passively managed utility ETFs here, we like the XLU for its deep liquidity and options.

Additionally, it is one of the oldest and has the lowest fees available.

So, for long-term investors, the XLU is an excellent choice as a core portfolio position.

Want to get content like this directly to your inbox?
Then we urge you to sign up for our newsletter here

Related posts

Carl Icahn Increases His Stake In Take-Two Interactive To 10.68%

ValueWalk

iPad Mini Display Outperformed By Kindle Fire HD & Nexus 7

ValueWalk

Foxconn Might Open Manufacturing Plants In The U.S. [REPORT]

ValueWalk

Peter Cundill Protégé Tim McElvaine on Investing in Japan [VIDEO]

ValueWalk

Set Bing Home Page Image As Lock Screen In Windows 8

ValueWalk

Morning Market News: JCP, APO, MCHP, ZIP, ENR, LGF, EA, ATVI, COV, LNT

ValueWalk