XLU - Leverage the Power of Utilities & Small-Caps With These ETFs | Benzinga
As the three major bourses are hovering near record highs, investors are rotating to areas like utility and the small-caps, which are cheap and undervalued. These zones have outperformed in May.
The Utilities Select Sector SPDR Fund emerged as the top performer among the 11 SPDR ETFs tracking the S&P 500 sectors. It rose nearly 9% last month, logging its largest monthly gain since March 2022, according to FactSet data. Meanwhile, small-cap stocks, as tracked by the Russell 2000 Index, surpassed the S&P 500 and the Dow Jones with a 4.9% monthly gain. It was the small-cap's best month since February.
Investors seeking to tap these hottest zones of the stock market could consider ETFs in these spaces. While there is a long list, we have highlighted the five most popular options from these zones. These include Utilities Select Sector SPDR Fund (ARCA:XLU), Vanguard Utilities ETF (ARCA:VPU), iShares Core S&P Small-Cap ETF (ARCA:IJR), iShares Russell 2000 ETF (ARCA:IWM), and Vanguard Small-Cap ETF (ARCA:VB).
Here, we have cited the reasons for their strong performance. The trend is likely to continue in the weeks ahead.
Utility
The utility sector, which tends to outperform when the economy is in a downturn, is making the most of the current volatility and uncertainty triggered by the timing of the Fed rate cuts, slowing economy and geopolitical tension. Being a low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment or safe haven amid economic or political turmoil.
Additionally, rising demand for electricity driven ...