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How Institutional Investors Played XLU in Q3 2018

Vineet Kulkarni - Author
By

Nov. 16 2018, Published 3:30 p.m. ET

Institutional activity in XLU

Utilities at large are up almost 3% so far this year, marginally outperforming broader markets. Investors turned to the relatively safe utilities lately amid trade war tensions and a recent broad-market selloff. In this series, we’ll take a look at how institutional investors played utilities in the third quarter.

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Top investors in XLU

According to a recent 13F filing, Goldman Sachs is the largest institutional investor in the Utilities Select Sector SPDR ETF (XLU), with 10.8% of its outstanding shares on September 30. It sold net 16.9 million shares and reduced the total number of shares to 15.2 million during the quarter. In the second quarter, Goldman Sachs held 22% of XLU’s total outstanding shares with more than 32.1 million shares.

Among noteworthy additions during the quarter, Morgan Stanley & Company bought net 8.9 million shares of XLU and raised its total stake up to 8.4% as of September 30. J.P. Morgan Securities also raised its stake in XLU and bought net 2.4 million shares during the third quarter. UBS Financial Services and Citi Investment Research added net 1.5 million and 1.2 million shares of XLU during Q3 2018 respectively.

XLU rose only 1.3% during the third quarter of 2018. Broader utilities (VPU)(IDU) are currently trading at an average dividend yield of 3.3%, which is a premium of 20 to 25 basis points compared to ten-year Treasury yields. The yield premium was 150 to 200 basis points when Treasury yields were much lower late last year.

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