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Utility funds might weather the next rate scare, Morningstar says

Jul. 11, 2014 11:10 AM ETIDU, XLU, VPU, PUI, RSPU, SDP, UPW, FXU, PSCU, FUTYBy: Carl Surran, SA News Editor1 Comment
  • Morningstar’s Robert Goldsborough thinks utilities are unlikely repeat their mid-2013 swoon, asserting that investors now are pricing in 4% U.S. Treasury yields, which would suggest no substantial downward moves in utilities if rates hit that level; utilitiy companies also could continue their recent outperformance if Treasury rates stabilized close to 3%.
  • On the other hand, Brendan Conway of Barron's sees this as reason for caution in the long run; if the climate of falling rates since 2000 is one of the drivers of utilities’ tremendous decade-plus performance, then the end of that climate would seem to bode ill for ETFs such as VPU and XLU.
  • Also: IDU, UPW, FUTY, RYU, PUI, FXU, SDP, PSCU

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