- The oldest Utilities Sector ETF has outperformed an S&P 500 index fund by 1.07% CAGR over the last 20 years
- The Utilities Sector has low correlation to broad U.S. Equity Markets
- There are 13 ETFs in the Morningstar Utilities category
- 7 of these Utilities Sector ETFs have been available for 10 years or longer
- This article will show the long-term performance of these 7 older Utilities Sector ETFs
XLU vs S&P 500 index fund: January 1999 – October 2019
XLU vs SPY: December 22, 1998 – November 15, 2019
The oldest Utilities Sector ETF is The Utilities Select Sector SPDR® Fund (XLU). It has an inception date of December 16, 1998. Since inception, XLU has outperformed an S&P 500 index fund by 1.07% CAGR. While producing good returns over this 20+ year period, XLU has also maintained a low correlation to the broader U.S. Markets with a correlation of just 0.39. XLU also shared nearly the same amount of volatility as an S&P 500 index fund.
There are 13 ETFs in the Morningstar Utilities category. 7 of these funds have been available for 10 years or longer. In the following chart, I have ranked these older Utilities Sector ETFs by long-term performance only.
Source: https://www.morningstar.com/ As of 10/14/19
The 4 best performing Utilities Sector ETFs were RYU, VPU, XLU and IDU. The charts below depict how they have performed against each other in the past.
RYU vs VPU vs XLU vs IDU: December 2006 – October 2019
RYU vs VPU vs XLU vs IDU: November 7, 2006 – November 15, 2019
RYU vs VPU: November 7, 2006 – November 15, 2019
VPU vs XLU: January 30, 2004 – November 15, 2019
XLU vs IDU: June 20, 2000 – November 15, 2019
Here are the stated objectives of these 4 top performing Utilities Sector ETFs:
RYU – The Invesco S&P 500® Equal Weight Utilities ETF (Fund) is based on the S&P 500® Equal Weight Telecommunication Services & Utilities Index (Index). The Fund will invest at least 90% of its total assets in securities that comprise the Index. The Index equally weights stocks found in the utilities and telecommunication services sectors of the S&P 500® Index. The Fund and the Index are rebalanced quarterly.
VPU – Vanguard Utilities ETF. Seeks to track the performance of a benchmark index that measures the investment return of stocks in the utilities sector. Passively managed, using a full-replication strategy when possible and a sampling strategy if regulatory constraints dictate. Includes stocks of companies that distribute electricity, water, or gas, or that operate as independent power producers.
XLU – The Utilities Select Sector SPDR® Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Utilities Select Sector Index (the “Index”). The Index seeks to provide an effective representation of the utilities sector of the S&P 500 Index. Seeks to provide precise exposure to companies from the electric utility, gas utility, multi-utility, and independent power producer and energy trader industries. Allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing.
IDU – The iShares U.S. Utilities ETF seeks to track the investment results of an index composed of U.S. equities in the utilities sector. Exposure to U.S. companies that supply electricity, gas, and water. Targeted access to domestic utility stocks. Use to express a sector view.
The Utilities Sector is a great way to gain exposure to an asset class that has low correlation to the broader U.S. Markets. The 4 ETFs in this category with the best long-term performance have had very similar returns, so selecting any one of these should be a good choice for exposure to the Utilities Sector.
Thank you for taking time to read this article. If you found it useful, please share it with a friend.
Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator articles on Utilities Sector ETFs:
Which Equity Asset Class has the Lowest Correlation to the U.S. Stock Market?
Best Long-Term Performance Utilities Sector ETFs 1.2
Best Long-Term Performance Utilities Sector ETFs 1.1
Disclosure: We currently own shares of RYU and we intend to buy more shares in the future. I am not a professional investment advisor. Please perform you own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to M1 Finance and Google AdSense.