Question 1

Are utilities ETFs good for income investing?

Accepted Answer

Utilities ETFs are among the best sectors for income investing, typically offering dividend yields of 2.5% to 4%, well above the broad market average. The regulated nature of utility businesses provides stable cash flows that support consistent dividend payments. Many utility companies have long histories of dividend growth. For maximum tax efficiency, consider holding utilities ETFs in tax-advantaged accounts since their dividends are often taxed as ordinary income.

Question 2

How do utilities ETFs perform when interest rates rise?

Accepted Answer

Utilities ETFs historically underperform when interest rates rise sharply because their relatively high dividend yields become less attractive compared to bonds and savings accounts. Higher rates also increase borrowing costs for capital-intensive utility projects. However, moderate rate increases in a growing economy can be absorbed, and the current surge in electricity demand is providing a growth catalyst that has made utilities more resilient to rate increases than in prior cycles.

Question 3

What is driving electricity demand growth for utilities?

Accepted Answer

Several structural forces are driving unprecedented electricity demand growth: the rapid buildout of AI data centers requiring massive power capacity, the electrification of transportation through EV adoption, industrial reshoring bringing manufacturing back to domestic markets, and population growth in Sun Belt regions. This demand growth is reversing decades of flat electricity consumption and has made utilities ETFs attractive not just for income but also for growth potential.

Question 4

Should I invest in water ETFs?

Accepted Answer

Water ETFs offer exposure to a unique investment theme driven by global water scarcity, aging infrastructure, stricter quality regulations, and population growth. These funds invest in water utilities, treatment companies, infrastructure providers, and technology firms. Water demand is non-discretionary and growing, providing a defensive growth profile. Water ETFs tend to be less interest rate sensitive than broad utilities ETFs because many holdings are industrial companies rather than regulated utilities.

Symbol▼	Fund Name▼	Issuer	Type	AUM▲	Expense Ratio▼	Price▼	YTD▼
PFFV	Global X - Variable Rate Preferred ETF	Global X	Preferred Stock	$304.7M	0.25%	$22.12	-0.50%
JXI	iShares Global Utilities ETF	iShares	Utilities	$326.2M	0.39%	$84.67	+7.55%
TPHD	Timothy Plan High Dividend Stock ETF	Timothy Plan	High Dividend Dividend Large Cap VIX	$341.4M	0.52%	$42.23	+9.71%
POWR	iShares U.S. Power Infrastructure ETF	iShares	Infrastructure	$373.6M	0.40%	$27.11	+15.26%
RYU	Invesco S&P 500 Equal Weight Utilities ETF	Invesco	Equal Weight S&P 500	$381.1M	0.40%	$109.80	—
CDL	VictoryShares US Large Cap High Div Volatility Wtd ETF	Victory Capital	High Dividend Dividend Large Cap Technology VIX	$385.3M	0.39%	$77.58	+12.76%
FTRB	Federated Hermes Total Return Bond ETF	Federated Hermes	Income Emerging Markets	$467.5M	0.51%	$25.13	-1.04%
PFLD	AAM Low Duration Preferred and Income Securities ETF	AAM	Preferred Stock Income Technology	$487.7M	0.45%	$19.62	+0.23%
RSPU	Invesco S&P 500 Equal Weight Utilities ETF	Invesco	Equal Weight S&P 500	$531.0M	0.40%	$79.40	+6.22%
HYGH	iShares Interest Rate Hedged High Yield Bond ETF	iShares	Corporate Bond High Yield Bond	$540.1M	1.12%	$86.61	+0.48%
LVHD	Franklin U.S. Low Volatility High Dividend Index ETF	Franklin Templeton	Low Volatility High Dividend Dividend High Yield Bond VIX	$595.4M	0.27%	$43.78	+9.90%
CDC	VictoryShares US EQ Income Enhanced Volatility Wtd ETF	Victory Capital	High Dividend Dividend Income Large Cap Value Technology VIX	$724.2M	0.38%	$74.42	+12.93%
FXU	First Trust Utilities AlphaDEX Fund	First Trust	Utilities	$829.0M	0.61%	$48.41	+7.69%
CGW	Invesco S&P Global Water Index ETF	Invesco	Infrastructure Water	$991.8M	0.58%	$63.01	-0.12%
BKGI	BNY Mellon Global Infrastructure Income ETF	BNY Mellon	Real Estate Infrastructure Oil & Gas Dividend Income Long-Term Bond	$1.12B	0.65%	$45.84	+13.73%
UTES	Virtus Reaves Utilities ETF	Virtus	Income	$1.32B	0.49%	$78.83	-0.13%
IDU	iShares U.S. Utilities ETF	iShares	Utilities	$1.42B	0.38%	$112.45	+3.89%
PFFD	Global X - U.S. Preferred ETF	Global X	Preferred Stock	$2.15B	0.23%	$18.82	-0.48%
FUTY	Fidelity MSCI Utilities Index ETF	Fidelity	Utilities	$2.35B	0.08%	$57.47	+4.20%
HYMB	State Street SPDR Nuveen ICE High Yield Municipal Bond ETF	SPDR	High Yield Bond Municipal Bond	$2.95B	0.35%	$25.20	+1.08%
ICLN	iShares Global Clean Energy ETF	iShares	Clean Energy ESG	$3.00B	0.39%	$20.98	+27.33%
UCON	First Trust Smith Unconstrained Bond ETF	First Trust	Income Long-Term Bond	$3.28B	0.86%	$24.89	-1.07%
FIXD	First Trust Smith Opportunistic Fixed Income ETF	First Trust	Income Long-Term Bond	$3.30B	0.65%	$43.60	-1.59%
EMLP	First Trust North American Energy Infrastructure Fund	First Trust	Active Clean Energy Infrastructure Natural Gas Oil Oil & Gas Dividend Income	$4.01B	0.95%	$43.45	+14.97%
ISTB	iShares Core 1-5 Year USD Bond ETF	iShares	Corporate Bond High Yield Bond	$4.93B	0.06%	$48.19	-1.17%
SPLV	Invesco S&P 500 Low Volatility ETF	Invesco	Low Volatility S&P 500 VIX	$7.03B	0.25%	$74.33	+4.27%
SHYG	iShares 0-5 Year High Yield Corporate Bond ETF	iShares	Corporate Bond High Yield Bond	$7.51B	0.30%	$42.37	-1.19%
ICSH	iShares Ultra Short Duration Bond Active ETF	iShares	Income Inverse	$7.62B	0.08%	$50.51	-0.16%
VPU	Vanguard Utilities ETF	Vanguard	Water	$11.10B	0.09%	$192.62	+4.24%
HYG	iShares iBoxx $ High Yield Corporate Bond ETF	iShares	Corporate Bond High Yield Bond	$16.10B	0.49%	$79.90	-0.86%
XLU	State Street Utilities Select Sector SPDR ETF	SPDR	Clean Energy Water S&P 500	$22.31B	0.08%	$44.47	+4.31%
HEWP	iShares Currency Hedged MSCI Spain ETF	iShares	Utilities	—	—	—	—
HEWI	iShares Currency Hedged MSCI Italy ETF	iShares	Diversified	—	—	—	—
MAAX	VanEck Muni Allocation ETF	VanEck	Multi-Asset Active Income Corporate Bond Municipal Bond	—	—	$20.72	—
GHII	Invesco S&P High Income Infrastructure ETF	Invesco	Infrastructure Income	—	—	—	—

Utilities ETFs

Frequently Asked Questions