Exchange-traded funds offer investors the benefit of protection from market turmoil – and utility ETFs are among the safest investment options out there, according to a report from Seeking Alpha
Utility ETFs are safe investment because utilities are in a highly regulated business. That regulation gives their revenue a high level of certainty. Utilities also have a strongly domestic focus, which insulates them from foreign currency translation issues. And many utility ETFs have returned in excess of 21% year to date.
Demand for utility services can vary with swings in the economy – but electricity, water and gas don’t see the dramatic swings many other products do.
“After all, these companies providing basic services can never go out of business – this is their most basic fundamental strength,” Seeking Alpha
The Dow Jones Utility Average is up 24.1% year to date, compared with the S7P 500’s 4.2% in the same time frame, Seeking Alpha reported. And earnings from utilities are expected to increase by 21% in the second quarter on a 2.4% top line increase. The S7P 500, meanwhile, is expected to see an earnings decline of 6.2% on 0.6% lower revenues.
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