US utility ETFs have witnessed an outflow of funds in the last couple of months. In late July, the Utilities Select Sector SPDR ETF (XLU) experienced an outflow of more than $1 billion. We could continue to see investors leaving utilities if the interest rate hike actually takes place this year.
On the other hand, US utilities (FXU)(IDU) are still yielding much more than most other investment options. Utilities’ average yield of 4% may draw in investors’ attention, as Treasuries and broader markets currently yield near 2%.