Should You Invest in the State Street Utilities Select Sector SPDR ETF (XLU)?

The State Street Utilities Select Sector SPDR ETF (XLU) was launched on December 16, 1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the equity market.Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.Index DetailsThe fund is sponsored by State Street Investment Management. It has amassed assets over $23.02 billion, making it the largest ETF attempting to match the performance of the Utilities - Broad segment of the equity market. XLU seeks to match the performance of the Utilities Select Sector Index before fees and expenses.The Utilities Select Sector Index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index.CostsWhen considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.Annual operating expenses for this ETF are 0.08%, making it the least expensive product in the space.It has a 12-month trailing dividend yield of 2.67%.Sector Exposure and Top HoldingsEven though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.This ETF has heaviest allocation in the Utilities sector -- about 100% of the portfolio.Looking at individual holdings, Nextera Energy Inc (NEE) accounts for about 13.52% of total assets, followed by Southern Co/the (SO) and Duke Energy Corp (DUK).The top 10 holdings account for about 57.72% of total assets under management.Performance and RiskThe ETF has gained about 6.26% so far this year and it's up approximately 12.19% in the last one year (as of 07/02/2026). In that past 52-week period, it has traded between $40.57 and $47.73.The ETF has a beta of 0.58 and standard deviation of 16.12% for the trailing three-year period, making it a medium risk choice in the space. With about 34 holdings, it has more concentrated exposure than peers.AlternativesState Street Utilities Select Sector SPDR ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLU is an outstanding option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.Fidelity MSCI Utilities Index ETF (FUTY) tracks MSCI USA IMI Utilities Index and the Vanguard Utilities Index Fund ETF Shares (VPU) tracks MSCI US Investable Market Utilities 25/50 Index. Fidelity MSCI Utilities Index ETF has $2.32 billion in assets, Vanguard Utilities Index Fund ETF Shares has $8.57 billion. FUTY has an expense ratio of 0.08%, and VPU charges 0.09%.Bottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks