To start last year, the utility sector was one of the market's best performers. Investors were riding high on this corner of the market thanks to slumping interest rates and worries about the overall health of the economy, pushing this corner of the market to fresh heights.
However, it definitely wasn't a full-year phenomenon, as the space was hit thanks to the election of Donald Trump and the subsequent surge in interest rates. So while it was still a solid performance for this corner of the market, what's an investor to do for their utility sector exposure in 2017?
Well, to get some insights on this market, I spoke with Jay Rhame, the co-portfolio manager of the Reaves Utilities ETF (UTES), for some thoughts on where this sector is heading this year. In the wide-ranging interview, we discuss what happened to the utility space in 2016, why rates can have such a big impact, and if Trump will impact the utility sector directly.
I also pick Jay's brain regarding his company's fund, UTES, and what might set this apart for investors looking to go beyond the big fund in the space, XLU. I was pretty skeptical on how an actively managed fund like UTES could set itself apart in a relatively small sector like utilities, but I think Jay won me over.
In particular, Jay discussed how the team at Reaves weeds out the tangentially related companies in this market such as those in the telecom world. Additionally, we also talk about how Rhame and his team use technical analysis and field research in order to find the best companies in this market, potentially setting it apart from the rest of the space.
If you thought the world of utilities was boring or not 'sexy' enough for most investors, you definitely need to give this interview a listen. It will most likely change your mind, like it did mine, about the market and where the potential in this space lies, even in a rising interest rate environment.
So, make sure to listen to this edition of the Dutram Report for a closer look at this often-overlooked, but potentially lucrative, segment of the equity world. And for more news and insights into the world of ETFs, make sure to be on the lookout for the next edition of the Dutram Report , and check out the many other great Zacks podcasts as well!
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