The Utilities Select Sector SPDR Fund ETF (NYSERCA:XLU), which tracks the utilities sector of the S&P 500, increased about 1.5% in the first quarter of 2024, well below the performance of the broader S&P 500 index, which increased by 10.7% during the same period.
He The ETF had fell 10.2% in 2023, while the benchmark rose 24.7% for the same period.
The index, which includes companies ranging from electricity providers to water providers, ranks second to last among the S&P 500's best-performing sectors so far this year.
XLU has $11.92 billion in assets under management as of March 28, 2024, and its largest components include NextEra Energy (NEE), Southern (SO), Duke Energy (DUK), Constellation Energy (CEG), and Sempra (SRE).
U.S. equity fund flows into and out of the utilities sector have been mostly in the red in the first quarter. The utilities-focused ETF had a net flow of -$2,255.96 million year to date.
Main movements to date
- Winners: Energy Constellation (CEG) +58.14%
- NRG Energy (NRG) +30.93%
- Public Utilities Group (PEG) +9.21%
- American Electric Power (AEP) +6.01%
- First energy (FE) +5.35%
- Losers: Xcel Energy (XEL) –13.18%
- American Water Works (AWK) -7.41%
- PG&E (PCG) -7.04%
- AES Corp (AES) -6.86%
- Sempra (SRE) -3.88%
What quantitative measures say
XLU received a Hold rating from Looking Alpha's Quant Rating system with a score of 2.89 out of 5, backed by an A+ in liquidity and an A in the expense category. The ETF earned a C+ for momentum, an A+ for dividends but a D- for risk.
What analysts expect
Looking Alpha contributor Skeptical 12 in its March 13 report said ETF Utility has underperformed the S&P 500 since 2021, offering investors only a total return of 11.41% compared to 35.76 % of the S&P 500.
“Today I am initiating coverage of XLU with a sell rating. The utility sector has struggled for multiple reasons with rising costs, higher rates and also rising capital spending levels. This sector also faces increased regulatory scrutiny and consumers are also more concerned about price levels. “Prices remain high if inflation rates have fallen over the past year, and this sector is likely to still consistently underperform the S&P 500 and other more attractive income investments even if Powell begins to ease monetary policy,” the contributor wrote.
