Designed to provide broad exposure to the Utilities - Broad segment of the equity market, the Vanguard Utilities ETF (VPU) is a passively managed exchange traded fund launched on 01/26/2004.
The Vanguard Utilities Index Fund ETF (NYSEARCA: VPU ) is up by about 9% year-to-date, suggesting that utility stocks have garnered fundamental support. The question now becomes: Are utility stocks overvalued, or are additional gains in store?
Utility stocks are some of the best investments for long-term passive income. These companies deliver steady cash income regardless of economic conditions.
The article evaluates the Vanguard Utilities Index Fund ETF Shares as an investment option at its current market price. I see Utilities as being a momentum play right now, and I question how long that will last. I think the AI-hype for this sector is a bit overblown. Elevated debt levels are also a concern for the sector, with credit ratings agencies issuing more downgrades than upgrades for the underlying companies.
This monthly article series provides industry metrics and ETF reviews in utilities. The sector is marginally overvalued. However, gas utilities are slightly undervalued. Vanguard Utilities Index Fund ETF Shares is an equivalent to XLU for long-term investors.