Morningstar (NSDQ: MORN) recently reported that 247 mutual funds suffered outflows of at least 10 percent over the past year, with 18 losing more than 40 percent of their assets under management. Redemptions on this scale usually occur toward the end of a bear market, when many investors throw in the towel.
This hemorrhaging stems from the growing belief that passive investment strategies involving exchange-traded funds (ETF) will outperform an active management over the long haul. Lower fees also help to bolster overall returns.
Of course, ETFs and other products that offer one-stop exposure to a particular sector or theme often weight their positions by market capitalization. Utilities Select Sector SPDR (NYSE: XLU), for example, rebalances its holdings quarterly and exhibits a bias toward stocks that have already run up.
At last check, NextEra Energy (NYSE: NEE), which trades at a record 21 times trailing earnings, accounted for 9 percent of the ETF’s portfolio. And the instant diversification offered by ETFs mean that you’ll always own the good, the bad and the ugly, which dilutes the best performers’ contribution.
But discriminating investors can take advantage of the rise of ETFs.
We examine the latest mergers and acquisitions, including a rumored deal that makes a world of sense for both parties and a takeover that may or may not make it to the finish line.
We review fourth-quarter results for the bulk of our Portfolio holdings.
In the fourth quarter, the telecom sector's big dogs continued to extend their lead over the also-rans.
We share our latest news and analysis related to our model Portfolio holdings, from guidance updates to recently completed deals.
Consolidated Edison's recently announced joint venture with Crestwood Equity Partners LP is the latest example of a utility leveraging its position as a demand-side customer and its low cost of capital to pursue ambitions in the midstream segment. Expect this trend to gain momentum in coming quarters.
Exelon Corp finally closed its acquisition of Pepco Holdings. Could another deal be in the utility's future?
Investors prize utility stocks for their resilience, but don't overlook their upside exposure to several secular growth trends--including the electric car's long-term potential.
Utility stocks offer exposure to underappreciated growth drivers.
The District of Columbia's Public Service Commission looks set to approve Exelon Corp's proposed takeover Pepco Holdings, if the acquirer agrees to additional terms. Investors can expect more deals to come in the utility sector--and long delays for regulatory approval.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
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Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.