Virtus Reaves Utilities ETF (UTES)
ARCA ARCA Primary 
Utilities Witness Longest Win Streak Since 2009: ETFs to Play
Utilities ETFs like UTES, FXU and FUTY soared in July as the sector recorded its strongest streak since 2009.
UTES: A Concentrated, Actively Managed Utility ETF Evolving Into A Growth Fund
UTES stands out as an actively managed utility ETF, outperforming peers by capitalizing on AI-driven electricity demand and focusing on independent power producers. The concentrated portfolio, led by skilled Reaves managers, has evolved into a growth-oriented utility ETF, but current valuations appear stretched after a recent rally. With a modest 1.6% yield, UTES isn't ideal for income investors; the Reaves Utility Income Fund (UTG) offers a 6.75% yield and similar management.
The Recent Pullback Gives A Nice Entry Point For Investors In UTES
Virtus Reaves Utilities ETF is a buy after its recent 6% pullback. UTES is actively managed, outperforming other utility ETFs, with a 45.31% price appreciation in 2024 and a five-star Morningstar rating. The fund's top holdings are less concentrated than before, with new investments like CenterPoint Energy showing strong growth potential and favorable regulatory support.
UTES: This Could Change Everything (Downgrade)
AI-driven energy demands have boosted utility stocks, but DeepSeek's efficient AI approach questions future growth projections, impacting the Virtus Reaves Utilities ETF (UTES). UTES saw significant gains in 2024, led by top holdings like Constellation Energy and Vistra, but current high valuations may not be sustainable if projections change. Environmental and regulatory challenges complicate utility expansions, making it difficult for UTES to find alternative growth opportunities within its top holdings.
UTES: Better For Investing In Vistra And Constellation
Vistra Corp. and Constellation Energy have surged due to their roles in powering AI data centers, with Vistra's diversified energy mix and strong earnings performance driving its rally. The Virtus Reaves Utilities ETF offers a diversified investment in utilities powering AI infrastructures, providing lower valuation multiples and reduced idiosyncratic risk compared to individual stocks. UTES' top holdings, including NextEra Energy and Vistra, are well-positioned to meet rising energy demands, with significant investments in renewables and battery storage.
UTES: A Strong Performing ETF Thanks To Active Management
Virtus Reaves Utilities ETF has been benefiting from the ETF's active management, with Reaves being an infrastructure-focused investment firm. The managers have successfully positioned the fund into a concentrated portfolio to benefit from the rising demand for powering the AI revolution. UTES may not provide a distribution yield that is as attractive as its CEF counterpart, UTG, but they could complement each other well.
UTES: A Backdoor Into The AI Theme
The Virtus Reaves Utilities ETF is an actively managed ETF focused on the Utilities sector. UTES has delivered a stunning 57% return in the past year, driven by AI data center energy demand. However, despite impressive short-term gains, I am cautious about the UTES ETF and the AI investment theme, as I see similarities between AI and the dot-com bubble.
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The Top ETF of the First Nine Months and Its Best Stocks
Reaves Utilities ETF targeting the utility sector is the top-performing ETF of the first nine months. Let's dig into its details below.
UTES: The Right Fund In The Right Sector
Defensive sectors like real estate and utilities are outperforming in times of high volatility and falling yields. The Virtus Reaves Utilities ETF stands out for its active management and strong performance. The focus on only 20 stocks and heavy concentration on the top 2 holdings shows conviction by the management team and is an approach that can deliver outsized returns.
UTES: Active Management Is Working Big Time
The utilities sector is performing well and offers value for investors. Virtus Reaves Utilities ETF (UTES) is a strong option for active management in the sector. UTES has outperformed the passive Utilities Select Sector SPDR ETF (XLU) and has a unique composition of holdings.
