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The First Trust Utilities AlphaDEX® Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant® Utilities Index.
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Tuesday, Oct 12013, 2:14 PM
Tuesday, Oct 12013, 2:14 PM| 3 Comments
- "The principle risk [for utilities is] 10-year yields taking another run at 3%," Deutsche's Jonathan Arnold says, in a cautiously upbeat note on the sector.
- Arnold notes that "regulated utility total return propositions of 7-8%" look good in risk-adjusted terms when compared with "expected market returns in the ~10% range."
- Upgraded: Duke Energy (DUK +0.4%), Portland General Electric (POR +1.5%), and PSEG (PEG +0.6%).
- Other Buy-rated names at Deutsche: CMS, ETR, CPN
- ETFs - IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT
- See also: Goldman warms to utilities
Tuesday, Sep 242013, 6:25 PM
Tuesday, Sep 242013, 6:25 PM| 5 Comments
- First-generation carbon capture technology on a commercially viable scale likely will not be available until 2020, and will be expensive but not insurmountable, according to a panel at a Platts coal conference.
- Tom Sarkus, a director with the National Energy Technology Laboratory, foresees the technology raising the cost of electricity by 30%, based on an average of estimates produced by industry and scientific groups.
- Sarkus says the costs can be reduced as the technology is improved, but warns it will take years before such improvements make it to the market.
- The topic was given more weight in light of last week's EPA announcement (I, II) that new coal-fired power plants will need to limit carbon dioxide emissions to 1,100 lbs./mw-hour of power produced.
- ETFs: KOL, XLU, IDU, PUI, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Saturday, Sep 212013, 8:25 AM
Saturday, Sep 212013, 8:25 AM| 87 Comments
- Both critics and supporters of the new EPA draft regulations on CO2 emissions agree on one thing: This will be the final blow to many proposed coal plants.
- The truth is, U.S. coal generation already was in decline not because of climate regulations, but because of good ol' free-market capitalism; the boom in natural gas production has dramatically increased supplies, sent prices plummeting and prompted a shift away from coal.
- Among potential long-term winners: U.S. nat gas drillers such as CHK and XOM, drilling services firms such as HAL and BHI, pipeline companies such as SE and KMI, makers of gas-fired turbines such as GE and SI, power generators such as NRG and CPN if electricity prices rise.
- Likely losers: Coal appears headed for a decline, and companies with large Appalachian operations such as JRCC and ANR could suffer most as more coal comes from cheaper-to-access deposits in the Illinois Basin and Wyoming; big industrial companies, which have used low U.S. power prices as a competitive advantage, are concerned.
- ETFs: KOL, IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Wednesday, Sep 182013, 6:39 PM
Wednesday, Sep 182013, 6:39 PM| 8 Comments
- EPA chief Gina McCarthy and Energy Secretary Ernest Moniz defended the Obama administration's climate change plans before a contentious House energy committee today, saying coal-fired power (KOL) will continue but economic growth and environmental protection go "hand in hand.”
- The first step is for the EPA to issue rules for new plants, which are set to be released this week; McCarthy told the panel the agency will issue the rules for existing plants by June 2014.
- Carbon capture and storage technology "is feasible and it is available today," McCarthy says, but critics say it is unproven, expensive and nonviable.
- The EPA reportedly will use Southern Co.'s (SO) $4.7B Kemper plant in rural Mississippi as an example that CCS technology is ready, but so far the project is most noteworthy for a $1B cost overrun, legal battles, a revolt by ratepayers and a credit downgrade for the local utility.
- ETFs: XLU, IDU, PUI, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Wednesday, Sep 182013, 11:27 AM
Wednesday, Sep 182013, 11:27 AM| Comment!
- The sector may be ready to be a defensive favorite again, writes analyst Michael Lapides, as declines have left utilities trading at 13.5x-14x 2015 EPS estimates, inline or even slightly below the average of the past 5-10 years.
- It's a tepid endorsement and Lapides and team aren't yet ready to turn bullish on the overall sector, but did raise ConEd (ED +0.1%) to a Buy while removing NRG Energy (NRG -2.4%) from Goldman's Conviction Buy list. After underperforming NRG by 12% YTD, Calpine (CPN -1.9%) now represents Goldman's preferred way to get exposure to the tight Texas power market.
- Other favorites include NextEra Energy (NEE +1%) and American Water Works (AWK +0.5%).
- Utility ETFs: IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Thursday, Sep 122013, 1:39 PM
Thursday, Sep 122013, 1:39 PM| 4 Comments
- Dividend payers may be a good place to hide out from rising interest rates, but those stocks sporting the highest yields - telecoms and utilities - tend to have slow payment growth, making them less-attractive as rates rise. Checking back to the 1994 bond bear market, telecoms and utilities were among the market's worst performers.
- Better to shop for modest payers, but above-average payment growth. Barron's screens for those characteristics combined with reasonable overall valuation and turns up three names: Boeing (BA), CVS Caremark (CVS), and GE.
- Certain dividend ETFs employ this strategy as well, with Vanguard's Dividend Appreciation (VIG) - almost zero exposure to telecoms and utilities - and WisdomTree's U.S. Dividend Growth ETF (DGRW) coming to mind. Others include DGRS, DNL, EMDG, DGRE.
- Other dividend ETFs: FDL, FVD, MDIV, QDF, QDYN, QDEF, DIV, CVY, DVY, HDV, IYLD, PEY, PFM, SCHD, SDY, SDYL, DVYL, VYM, DHS, DTD, SYLD, KBWD, SPHD, DLN, DON, HILO.
- Telecom and utility ETFs: IYZ, XTL, VOX, LTL, TLL, IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Wednesday, Sep 112013, 12:52 PM
Wednesday, Sep 112013, 12:52 PM| 6 Comments
- The Obama administration is considering banning new coal plants without increased emission standards, Bloomberg reports.
- Revised EPA rules are under White House review and could be reworked before a scheduled Sept. 20 release, but it appears new coal plants would need to install expensive equipment to limit climate-change emissions.
- The revised standard would retain a provision letting utilities phase-in the capture technology over time, a source says.
- ETFs: KOL, XLU, IDU, PUI, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Wednesday, Sep 112013, 12:19 PM
Wednesday, Jul 242013, 1:29 PMUtilities (XLU -1.7%) lead the way lower today as interest rates shoot higher. Also taking a hit are basic materials (XLB -1.2%) and energy (XLE -1.5%) as most commodities, including oil (USO -1.8%), are lit up bright red. Bank of America, AIG, and Berkshire Hathaway are among the financial sector (XLF -0.6%) stocks taking a breather after big runs for most. |Wednesday, Jul 242013, 1:29 PM| Comment!
Friday, Jul 52013, 10:58 AM
Tuesday, Jun 182013, 9:11 AMBAML private clients bought the dip last week, with the flows going via ETFs into large-cap and dividend plays like Utilities (XLU, IDU) - which saw the greatest buying since November 2011. Another favorite of the dividend crowd, Telecoms (IYZ) saw the biggest inflows since February. After buying through the spring, hedge funds turned sellers last week, and are now net-sellers YTD - just like 2012. |Tuesday, Jun 182013, 9:11 AM| Comment!
Friday, May 312013, 2:49 PMStocks turn lower (DIA -0.5%) 90 minutes ahead of the bell as Treasury prices tumble anew (TLT -1.2%), the 10-year yield gaining another 9 bps to 2.20%. The levered Treasury short ETF (TBT +2.5%) hits a 52-week high. Again hardest hit are the previously hot defensive sectors whose yields no longer stand so tall over Treasurys. Health care (XLV -1.1%), Consumer staples (XLP -1.1%). Utilities (XLU +0.1%) however, get a respite from an ugly month. |Friday, May 312013, 2:49 PM| 6 Comments
Thursday, May 302013, 4:58 PMThe utilities sector (XLU +0.2%), up as much as 2% early after NV Energy (NVE +22.5%) agreed to be acquired by Berkshire Hathaway at a hefty premium, wound up surrendering the bulk of its gains. Utilities remain May's weakest performer, down 8.5%, as rising interest rates, optimism over economic growth and a downbeat reading on future electricity prices send yield-seekers rotating into cyclicals. |Thursday, May 302013, 4:58 PM| Comment!
Thursday, May 302013, 3:22 PMThe Utilities Select Sector ETF (XLU) - which outpaced the broader averages for much of the year - is on pace for its worst month since the dark days of February 2009, off 7.9% thus far. The steady dividend payers have been sought-after commodities for some time, but a 50 bp rise to 2.12% in May has the 10-year Treasury offering a bit of competition. |Thursday, May 302013, 3:22 PM| 2 Comments
Tuesday, May 282013, 2:59 PMIf long-term Treasury yields keep rising, dividend-seeking investors in utilities (XLU -1.4%) will wonder how the lights went out for the sector, 24/7's Jon Ogg writes. The risk isn't only that investors may go elsewhere for yield; utilities have high operating costs and they borrow heavily to pay for infrastructure investments. Today's analyst downgrades only magnify what investors have to fear. |Tuesday, May 282013, 2:59 PM| 5 Comments
Tuesday, May 282013, 11:45 AMAs stocks move broadly higher, utilities (XLU) lag following downgrades of Exelon (EXC -7.1%) and First Energy (FE -6.7%) by Deutsche Bank based on "the ugly reality of the 2016-17 RPM auction results." The firm sees downside in all integrated power names as the "uncertain path to a power market recovery forces investors to reconsider the multiples paid for commodity cyclical power generation assets." (earlier) |Tuesday, May 282013, 11:45 AM| 4 Comments