Looking for broad exposure to the Utilities - Broad segment of the equity market? You should consider the iShares U.S. Utilities ETF (IDU), a passively managed exchange traded fund launched on 06/12/2000.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $1.29 billion, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. IDU seeks to match the performance of the Dow Jones U.S. Utilities Index before fees and expenses.
The Russell 1000 Utilities RIC 22.5/45 Capped Index measures the performance of the utilities sector of the U.S. equity market. It includes companies in the following sectors: electricity and gas, water and multi-utilities.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.29%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 89.50% of the portfolio, followed by Industrials.
Looking at individual holdings, Nextera Energy Inc (NEE) accounts for about 11.03% of total assets, followed by Southern (SO) and Waste Management Inc (WM).
The top 10 holdings account for about 53.56% of total assets under management.
Performance and Risk
The ETF has gained about 0% so far this year and is up about 23.12% in the last one year (as of 01/01/2025). In that past 52-week period, it has traded between $76.16 and $105.57.
The ETF has a beta of 0.61 and standard deviation of 17.24% for the trailing three-year period, making it a medium risk choice in the space. With about 48 holdings, it has more concentrated exposure than peers.
Alternatives
IShares U.S. Utilities ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IDU is an excellent option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $6.35 billion in assets, Utilities Select Sector SPDR ETF has $16.26 billion. VPU has an expense ratio of 0.10% and XLU charges 0.09%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Free: See Our Top Stock And 4 Runners UpiShares U.S. Utilities ETF (IDU): ETF Research Reports
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
Waste Management, Inc. (WM) : Free Stock Analysis Report
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
Vanguard Utilities ETF (VPU): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
