Best-In-Class Utility And Water ETFs
By Barchart's ETF Recommendations:
U.S. Utility ETFs
Our choice for the “Best in Class” for the U.S. Utility group is the Vanguard Utilities ETF (VPU), due to its better performance over the past five years relative to the SPDR Utilities Select Sector Fund (XLU). XLU is the granddaddy in the group, with $6 billion in assets under management, but we do not regard this as a huge advantage considering Vanguard’s VPU currently has $700 million in assets under management, which is more than enough to provide liquidity and narrow bid-offer spreads.
Figure 1: VPU Versus XLU
We also like VPU because it holds 85 stocks, which makes it more diversified and less subject to single-company risk than XLU, which holds 35 stocks. VPU has a slightly higher expense rate of 0.24% versus 0.20% for XLU, but this is more than offset in our view by the higher returns provided by VPU in recent years.Complete Story »