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Should You Invest in the iShares U.S. Utilities ETF (IDU)?
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Launched on 06/12/2000, the iShares U.S. Utilities ETF (IDU - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Utilities - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $852.59 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. IDU seeks to match the performance of the Dow Jones U.S. Utilities Index before fees and expenses.
The Russell 1000 Utilities RIC 22.5/45 Capped Index measures the performance of the utilities sector of the U.S. equity market. It includes companies in the following sectors: electricity and gas, water and multi-utilities.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.45%.
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 89.90% of the portfolio, followed by Industrials.
Looking at individual holdings, Nextera Energy Inc (NEE - Free Report) accounts for about 14.72% of total assets, followed by Duke Energy Corp (DUK - Free Report) and Waste Management Inc (WM - Free Report) .
The top 10 holdings account for about 56.46% of total assets under management.
Performance and Risk
So far this year, IDU has lost about -1.55%, and is up about 13.73% in the last one year (as of 01/14/2022). During this past 52-week period, the fund has traded between $72.46 and $88.43.
The ETF has a beta of 0.45 and standard deviation of 24.36% for the trailing three-year period, making it a medium risk choice in the space. With about 47 holdings, it has more concentrated exposure than peers.
Alternatives
IShares U.S. Utilities ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IDU is a reasonable option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.35 billion in assets, Utilities Select Sector SPDR ETF has $12.98 billion. VPU has an expense ratio of 0.10% and XLU charges 0.12%.
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 iShares U.S. Utilities ETF (IDU)?
Launched on 06/12/2000, the iShares U.S. Utilities ETF (IDU - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Utilities - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $852.59 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. IDU seeks to match the performance of the Dow Jones U.S. Utilities Index before fees and expenses.
The Russell 1000 Utilities RIC 22.5/45 Capped Index measures the performance of the utilities sector of the U.S. equity market. It includes companies in the following sectors: electricity and gas, water and multi-utilities.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.41%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.45%.
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 89.90% of the portfolio, followed by Industrials.
Looking at individual holdings, Nextera Energy Inc (NEE - Free Report) accounts for about 14.72% of total assets, followed by Duke Energy Corp (DUK - Free Report) and Waste Management Inc (WM - Free Report) .
The top 10 holdings account for about 56.46% of total assets under management.
Performance and Risk
So far this year, IDU has lost about -1.55%, and is up about 13.73% in the last one year (as of 01/14/2022). During this past 52-week period, the fund has traded between $72.46 and $88.43.
The ETF has a beta of 0.45 and standard deviation of 24.36% for the trailing three-year period, making it a medium risk choice in the space. With about 47 holdings, it has more concentrated exposure than peers.
Alternatives
IShares U.S. Utilities ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IDU is a reasonable option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.35 billion in assets, Utilities Select Sector SPDR ETF has $12.98 billion. VPU has an expense ratio of 0.10% and XLU charges 0.12%.
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.