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Should You Invest in the Vanguard Utilities ETF (VPU)?
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Designed to provide broad exposure to the Utilities - Broad segment of the equity market, the Vanguard Utilities ETF (VPU - Free Report) is a passively managed exchange traded fund launched on 01/26/2004.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $4.79 billion, making it one of the largest ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. VPU seeks to match the performance of the MSCI US Investable Market Utilities 25/50 Index before fees and expenses.
The MSCI US Investable Market Utilities 25/50 Index comprises of stocks of large, mid-size, and small U.S. companies within the utilities sector.
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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.62%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 99.70% of the portfolio.
Looking at individual holdings, Nextera Energy Inc (NEE - Free Report) accounts for about 11.72% of total assets, followed by Southern Co/the (SO - Free Report) and Duke Energy Corp (DUK - Free Report) .
The top 10 holdings account for about 52.31% of total assets under management.
Performance and Risk
The ETF has lost about -3.61% so far this year and is down about -7.50% in the last one year (as of 02/13/2024). In that past 52-week period, it has traded between $121.65 and $152.05.
The ETF has a beta of 0.58 and standard deviation of 17.86% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard 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, VPU is a sufficient 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.
Fidelity MSCI Utilities Index ETF (FUTY - Free Report) tracks MSCI USA IMI Utilities Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Fidelity MSCI Utilities Index ETF has $1.29 billion in assets, Utilities Select Sector SPDR ETF has $12.22 billion. FUTY has an expense ratio of 0.08% and XLU charges 0.10%.
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 Vanguard Utilities ETF (VPU)?
Designed to provide broad exposure to the Utilities - Broad segment of the equity market, the Vanguard Utilities ETF (VPU - Free Report) is a passively managed exchange traded fund launched on 01/26/2004.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $4.79 billion, making it one of the largest ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. VPU seeks to match the performance of the MSCI US Investable Market Utilities 25/50 Index before fees and expenses.
The MSCI US Investable Market Utilities 25/50 Index comprises of stocks of large, mid-size, and small U.S. companies within the utilities sector.
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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.62%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 99.70% of the portfolio.
Looking at individual holdings, Nextera Energy Inc (NEE - Free Report) accounts for about 11.72% of total assets, followed by Southern Co/the (SO - Free Report) and Duke Energy Corp (DUK - Free Report) .
The top 10 holdings account for about 52.31% of total assets under management.
Performance and Risk
The ETF has lost about -3.61% so far this year and is down about -7.50% in the last one year (as of 02/13/2024). In that past 52-week period, it has traded between $121.65 and $152.05.
The ETF has a beta of 0.58 and standard deviation of 17.86% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard 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, VPU is a sufficient 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.
Fidelity MSCI Utilities Index ETF (FUTY - Free Report) tracks MSCI USA IMI Utilities Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Fidelity MSCI Utilities Index ETF has $1.29 billion in assets, Utilities Select Sector SPDR ETF has $12.22 billion. FUTY has an expense ratio of 0.08% and XLU charges 0.10%.
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.