Tag: VPU

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5 Best Utilities Sector ETFs to Own Long-Term: RSPU vs XLU vs VPU vs IDU vs FUTY 1.7

  • Asset Class: Utilities Sector

  • Oldest ETF back tested: The Utilities Select Sector SPDR® Fund (XLU)

  • Correlation to U.S. Stock Market: 0.44

  • Long-Term Performance: 6.66% CAGR

  • S&P 500 Performance: 7.46% CAGR

  • Back test timeframe: January 1999 – December 2023

  • Number of ETFs available in this asset class: 12

  • Number of ETFs in this asset class that are 10-years old or older: 9

XLU vs SPY: January 1999 – December 2023

XLU vs SPY: December 22, 1998 – January 5, 2024

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4 Best Utilities Sector ETFs to Own Long-Term 1.6

  • Asset Class: Utilities Sector

  • Oldest ETF back tested: The Utilities Select Sector SPDR® Fund (XLU)

  • Correlation to U.S. Stock Market: 0.43

  • Long-Term Performance: 7.32% CAGR

  • S&P 500 Performance: 7.03% CAGR

  • Back test timeframe: January 1999 – November 2022

  • Number of ETFs available in this asset class: 12

  • Number of ETFs in this asset class that are 10-years old or older: 8

XLU vs SPY: January 1999 – November 2022

XLU vs SPY: December 22, 1998 – December 2, 2022

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4 Best Long-Term Performance Utilities Sector ETFs 1.5

  • Asset Class: Utilities Sector

  • Oldest ETF back tested: The Utilities Select Sector SPDR® Fund (XLU)

  • Correlation to U.S. Stock Market: 0.40

  • Long-Term Performance: 7.24% CAGR

  • S&P 500 Performance: 7.87% CAGR

  • Back test timeframe: January 1999 – October 2021

  • Number of ETFs available in this asset class: 13

  • Number of ETFs in this asset class that are 10-years old or older: 8

XLU vs SPY: January 1999 – October 2021

XLU vs SPY: December 22, 1998 – November 12, 2021

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4 Best Long-Term Performance Utilities Sector ETFs 1.4

  • Asset Class: Utilities Sector

  • Oldest ETF back tested: The Utilities Select Sector SPDR® Fund (XLU)

  • Correlation to U.S. Stock Market: 0.40

  • Long-Term Performance: 7.09% CAGR

  • S&P 500 Performance: 6.50% CAGR

  • Back test timeframe: January 1999 – October 2020

  • Number of ETFs available in this asset class: 13

  • Number of ETFs in this asset class that are 10-years old or older: 8

XLU vs SPY: January 1999 – October 2020

XLU vs SPY: December 22, 1998 – October 30, 2020

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4 Best Long-Term Performance Utilities Sector ETFs 1.3

  • 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

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Best Long-Term Performance Utilities Sector ETFs 1.2

  • The oldest available Utilities sector ETF has outperformed an S&P 500 index fund by 0.77% CAGR over the last 20 years
  • The Utilities sector is an excellent portfolio diversifier with an ultra-low US Market correlation of 0.38
  • There are currently 13 Utilities Sector ETFs available; 7 of these have inception dates that are 10 years old or older

XLU vs S&P 500 index fund: January 1999 – November 2018

Source: https://www.portfoliovisualizer.com/

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Best Long-Term Performance Utilities Sector ETFs 1.1

As most portfolio managers know, building a broadly diversified portfolio has one key building block. Low or negatively correlated assets. Ideally, if each of these building blocks has low correlation to the others, one or more will be falling in value while the others are going up in value. This ideal scenario lends itself to arbitrage opportunities and the ability to buy assets when the market has placed them ‘on-sale’. With that said, have you considered diversifying a portion of your portfolio into the Utilities sector? If you want low correlated assets in your portfolio, I would suggest considering the Utilities sector. The utilities sector has maintained a very low correlation to the U.S. Stock Market over the last 19 years, at just 0.39. I wrote more in depth about this low correlation phenomena right here:  Which Equity Asset Class has the Lowest Correlation to the U.S. Stock Market?

Utilities Sector Correlation to U.S. Markets January 1999 – December 2017

Source: Portfolio Visualizer

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