Best Utility ETFs, Mutual Funds, and Indexes

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Utilities are not the popular kids of the stock market world. They are generally known for their stability and dividends and rarely have eye-popping returns. Investors include utility funds in their portfolios to hedge against market volatility. When the market is in turmoil, sensitive stocks like technology have a tendency to lose value rapidly. Inversely, because people always need services like water, sewage, electricity, or natural gas the market returns for utility stocks will drop less during hard economic times.

But just because utilities tend to be more stable than other stocks does not mean they should comprise a large portion of an investment portfolio. During a short term recession, having a utility ETF or mutual fund in your portfolio may limit your overall losses but over the long term if you have too high a percentage of utilities in your portfolio, that same stability will result in lower overall gains as other sectors such as technology provide greater returns. 

However you decide to allocate utility funds in your portfolio, here is a list of possible ETFs and mutual funds with a minimum investment of less than $10,000 and a market history of at least five years. For reference, the SPDR S&P 500 ETF is included and highlighted green to compare these funds with overall market returns. The ETFs highlighted in yellow are funds that mimic the overall utility sector. Funds not highlighted are 1) ETFs that are based on a niche index (very narrow group of utilities such as wind energy or nuclear energy), 2) ETFs that have an enhanced strategy or are actively managed, or 3) are a mutual fund attempting to beat the market sector with various strategies.






Best Sector Index ETFs (least risky)


Vanguard Utilities ETF (VPU)

Five Year Return (After Fees): 10.23%
Expense Ratio: 0.10%
Benchmark Index: MSCI US Investable Market Utilities 
ETF Type: Passively Managed, Sector Index 


Fidelity MSCI Utilities Index ETF (FUTY)

Five Year Return (After Fees): 10.20%
Expense Ratio: 0.08%
Benchmark Index: MSCI USA IMI Utilities 
ETF Type: Passively Managed, Sector Index


Best Mutual Funds (more risky)

Wells Fargo Utility and Telecommunications Fund - Class A (EVUAX)
Five Year Return (After Fees): 9.05%
Expense Ratio: 1.05%
Benchmark Index: N/A 
ETF Type: N/A 


ICON Utilities and Income Fund Investor (ICTVX)
Five Year Return (After Fees): 7.66%
Expense Ratio: 1.48%
Benchmark Index: N/A 
ETF Type: N/A 


Best Enhanced Strategy, Actively Managed, or Niche Index ETFs (more risky)

Invesco WilderHill Clean Energy ETF (PBW)
Five Year Return (After Fees): 23.55%
Expense Ratio: 0.70%
Benchmark Index: WilderHill Clean Energy
ETF Type: Passively Managed, Niche Index 

Invesco Solar ETF (TAN)
Five Year Return (After Fees): 15.53%
Expense Ratio: 0.71%
Benchmark Index: MAC Global Solar Engergy
ETF Type: Passively Managed, Niche Index 




This information is for educational purposes only and is not a recommendation to buy.

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