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Utility funds that bubbled to the top of the performance list this week focus on companies that provide infrastructure to cities around the world. The deepest well of support came from
PowerShares Global Water Portfolio
, up 4.5% for the five trading days ending Thursday, May 21.
, one of the fund's holdings, spiked 22% after Chief Executive Officer Malcolm Unsworth met with Energy Secretary Sten Chu and Commerce Secretary Gary Locke to discuss standards for smart-grid electric meters. Simply put, Itron is North America's leader in advanced meters for electric, gas and water, and made sure its meters qualified under standards set for available stimulus-fund projects of the Department of Energy.
Another U.S. holding,
, gained 4.9%. The company fabricates steel pipe irrigation systems for farming as well as poles and towers, which will be required in any rebuilding of the electric-grid infrastructure. Lower commodities prices would expand the company's profit margins.
The PowerShares Global Water Portfolio is sufficiently liquid, averaging a trading volume of nearly 100,000 shares a day over the past six months. However, the
SPDR S&P International Utilities Sector ETF
, which began trading 10 months ago, is highly illiquid, averaging just 1,600 shares traded daily.
The SPDR S&P International Utilities Sector ETF gained 3.6% this week on standout performances of 15% from
, 11% in
and 8.1% in
While the 200% leveraged
ProShares UltraShort Utilities
, which bets on a decline in share prices, returned 5.2% to top the list of best-performing utility funds, the two "long" leveraged funds tracking the same Dow Jones U.S. Utilities Index sank the most this week.
The 200% leveraged
ProShares Ultra Utilities
lost 5.7% and the 150% leverage
ProFunds Utilities UltraSector Profund
shed 4.5%. Index member
fell 7.8% on the results of the Public Utility Commission of Ohio's wholesale auction. The accepted bid of $61.50 a megawatt-hour may decrease monthly electric bills for Toledo residents by nearly 13% and result in lower electric-generation sales for the company.
Other electric utilities in the index, operating in the same environment of depressed coal and gas prices as well as slack industrial demand for electricity from steel producers and automakers, followed FirstEnergy.
( AYE) lost 14.1%,
dropped 5.7% and
gave back 5.4%.
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Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.