The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By Dave Fry
NEW YORK (
) -- Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication, and nearly 40 years in the investment business, we can help select those ETFs that matter and may or may not be repetitive. The result is a more manageable list of issues from which to view and make selections.
There is currently an expanding list of 24 ETFs oriented to the utility and infrastructure sector with more on the way. The following analysis features a fair representation of ETFs available. We believe from these investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.
We're not ranking these ETFs favoring one over another, so don't let the listing order mislead you. Although we may use some of these in ETF Digest portfolios, it's not our intention to recommend one over another.
ETFs are based on indexes tied to well-known index providers including Russell,
, Barclays, MSCI, Dow Jones and so forth. Also included are some so-called "enhanced" indexes that attempt to achieve better performance through more active management of the index.
Where competitive issues exist and/or repetitive issues available at a fee cost saving, we mention those as other choices. New issues are coming to market consistently (especially globally) and sometimes these issues will need to become more seasoned before they may be included at least in our listings.
For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.
SPDR Utilities Sector ETF
) follows the Utilities Select Sector Index covers most publicly traded U.S. utilities, multi-utilities, independent power producers & traders and gas utilities.
The fund was launched in December 1998. The expense ratio is .20%. AUM (Assets under Management) equal billion and average daily trading volume is 6.3M shares. As of late July 2011 the annual dividend was $1.21, making the current yield 3.50% and year-to-date return 8.60%.
An alternative choice is
ML Utilities HOLDRS
, which is structured as a trust with fixed holdings that are only altered as companies within the holdings are merged, spun-off or fail. Over time concentration issues arise which can prove positive or negative.
Here are XLU's top 10 holdings and weightings as of July 2011. They are 1. Southern Co. (SO): 8.42%; 2. Exelon (EXC): 6.97%; 3. Dominion Resources (D): 6.82%; 4. NextEra Energy (NEE): 5.95%; 5. Duke Energy (DUK): 5.68%; 6. FirstEnergy (FE): 4.53%; 7. American Electric Power (AEP): 4.48%; 8. PG&E (PCG): 4.13%; 9. Public Service Enterprise Group (PEG): 4.05%; 10. PPL (PPL): 3.96%