FUTY: Utilities' AI Intrigue Fades

seekingalpha07-03

Justin Paget It was a tough stretch for much of the global stock market in the second quarter, at least away from big-cap tech. In the US, just four sectors posted positive returns, led by the ...

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In the US, just four sectors posted positive returns, led by the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702156-futy-etf-utilities-ai-intrigue-fades\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"XLC","symbol_name":"Communication Services Select Sector SPDR Fund","start_time":0,"source_url":"https://seekingalpha.com/article/4702156-futy-etf-utilities-ai-intrigue-fades","article_id":"2448142785","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1440204542/image_1440204542.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2448142785","pubTimestamp":1719977598,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Justin Paget It was a tough stretch for much of the global stock market in the second quarter, at least away from big-cap tech. In the US, just four sectors posted positive returns, led by the Informa","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"XLC":"Communication Services Select Sector SPDR Fund","FDN":"First Trust Dow Jones Internet I","FUTY":"Fidelity MSCI Utilities Index ETF","XLK":"高科技指数ETF-SPDR","BK4550":"红杉资本持仓","BK4585":"ETF&股票定投概念","BK4588":"碎股"},"translate_title":"FUTY：公用事业公司的人工智能兴趣消退","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FUTY":1,"XLC":1,"XLK":1,"FDN":0.9},"content_text":"Justin Paget It was a tough stretch for much of the global stock market in the second quarter, at least away from big-cap tech. In the US, just four sectors posted positive returns, led by the Information Technology Select Sector SPDR Fund ETF (XLK), which soared 9% with dividends included. Communication Services (XLC) was next best. Earning the Q2 bronze metal was the Utilities sector.  I am neutral with a hold rating on the Fidelity MSCI Utilities Index ETF (NYSEARCA:FUTY) given where its current valuation stands and amid mixed momentum trends. 1H24 ETF Performance Heat Map Finviz Utilities Sector P/E Up from Last Year, Above the Long-Term Average Yardeni Research According to the issuer, FUTY seeks to provide the Investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Utilities 25/50 Index. The ETF invests at least 80% of assets in securities included in the MSCI USA IMI Utilities 25/50 Index and uses a representative sampling indexing strategy to manage the portfolio. FUTY is a moderate-sized ETF with $1.18 billion in assets under management as of June 28, 2024. The ETF is ideal for long-term investors who seek to actively manage their US sector exposure, given its low 0.08% annual expense ratio. FUTY pays a dividend yield more than twice that of the S&P 500, currently at 3.21% on a trailing 12-month basis. Share price momentum is soft, however, earnings just a C- ETF Grade by Seeking Alpha. As you might imagine, the fund’s historical standard deviation levels are not particularly high, but its concentrated stock mix does bring about some portfolio risk. But liquidity metrics are robust with FUTY despite low average daily trading volume of 140,000 shares – the median 30-day bid/ask spread is just two basis points, according to Fidelity. Looking closer at the portfolio, the 4-star, Silver-rated ETF by Morningstar is tilted toward the value style as opposed to holding a significant amount of growth companies. Just 9% of the allocation is growth, despite all the AI intrigue just a couple of months ago.  There’s also risk in the sense that there is a high degree of mid-cap exposure – more than half of the portfolio is mid-cap, with 9% small-cap access. The P/E multiple is close to 18, which is not a great bargain on an absolute basis, though it is more than two turns cheaper than the S&P 500. Considering long-term EPS growth of 7.4%, the PEG ratio is actually quite elevated today. FUTY: Portfolio & Factor Profiles Morningstar While the Utilities sector is defensive by nature, there is a risk when analyzing the top 10 assets, which comprise more than half of the portfolio. Also bear in mind that the renewable energy landscape is quite tied to capital markets, including the level and trend of interest rates. Expect FUTY to outperform if we see rates fall and a flight-to-quality trade ensues across markets. FUTY: Holdings & Dividend Information Seeking Alpha The risks are plentiful, but July has been among FUTY’s best months of the year according to the past 10 years of historical data. August has been flat while the third quarter ends with volatility, at least that has been the trend. FUTY: Bullish July Trends Seeking Alpha The Technical Take With a somewhat high valuation and concentrated allocation, FUTY’s technical view is mixed. Notice in the chart below that shares reached a 52-week-high back in May, above $47 for a time, but the ETF then turned overbought. The RSI momentum indicator at the top of the graph neared 80 – something we haven’t seen in years. So, a pullback into the end of Q2 was not a surprise. Where might support show itself? I think $43 could be a favorable entry point. That was an area of resistance in December 2023 and this past April before the bulls took the fund higher. Moreover, the long-term 200-day moving average is positively sloped, which suggests that bulls control the primary trend. Still, resistance has been seen between $47 and $48, while there is a high amount of volume by price up to about $47, so the bulls have their work cut out for them if they want to take FUTY to prices not seen since September 2022. FUTY: Downtrend Broken, But Upside Resistance Remains In Play StockCharts.com The Bottom Line  I have a hold rating on FUTY. The valuation is not all that cheap historically, while technicals show mixed upside and downside risks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2448142785"}