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Utilities ETF (VPU) Hits New 52-Week High

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For investors seeking momentum, Vanguard Utilities ETF (VPU - Free Report) is probably on radar. The fund just hit a 52-week high and is up 18.4% from its 52-week low price of $138.25/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 of where it might be headed:

VPU in Focus

Vanguard Utilities ETF targets the utilities segment of the broad stock market. It has key holdings in electric utilities and multi utlilities. The product charges 10 bps in annual fees (see: all the Utilities ETFs here).

Why the Move?

The utility sector has been an area to watch lately given uncertainty and volatility. The U.S. Treasury bond yield curve inverted for the first time in three years, signaling U.S. recession. The curve is flattening as investors are betting on faster and deeper Federal Reserve rate hikes while at the same time worrying about near-term growth prospects in the world's biggest economy. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market. It is thus, considered a defensive investment or safe haven amid economic or political turmoil.

More Gains Ahead?

Currently, VPU has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.


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