What You Don’t Know About Utilities May Surprise You

Utilities: An Overlooked and Underappreciated Asset Class

Utility stocks have traditionally been valued by many investors and advisors for their dividend yields and bond-like characteristics. But the performance of utility stocks may surprise you. Did you know that over the past 50 years, utilities have outperformed the S&P 500 Index with half the volatility?1 Or that over the last 15 months, as the S&P 500 and Bloomberg U.S. Intermediate Treasury Index each declined by more than 10%, utilities generated a positive total return of 5.1%?2 A new paper from the utility specialists at Reaves Asset Management on this often-overlooked sector — and its growth prospects — sheds some surprising light on utilities.

2021.11 The Case for Actively Managed Utilities CTA

Disclosures and Definitions:
Reaves Asset Management is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration does not imply any skill or training and any additional facts other than registration or whether the SEC approves or disapproves of our registration. Reaves is a privately held, independently owned “S” corporation organized under the laws of the State of Delaware.

The information provided in this blog does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed. Investors should consider the investment objective, risks, charges and expenses of all investments carefully before investing. Any projections, outlooks or estimates contained herein are forward looking statements based upon specific assumptions and should not be construed as indicative of any actual events that have occurred or may occur.

1Performance data cited is for the Dow Jones Utility Average for the time period February 1973-October 2022.

215- month period ended October 31, 2022

The S&P 500 Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies.

The Bloomberg U.S. Intermediate Treasury Index measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Treasury bills are excluded by the maturity constraint. The U.S. Treasury Index is a component of the U.S. Aggregate, U.S. Universal, Global Aggregate and Global Treasury Indices.

The Dow Jones Utility Average aims to represent the stock performance of large, well-known U.S. companies within the utilities industry. The indexes are calculated on a total return basis with dividends reinvested. The indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment.

Past results do not guarantee future performance. Further, the investment return and principal value of an investment will fluctuate; thus, investor’s equity, when liquidated, may be worth more or less than the original cost. This document provides only impersonal advice and/or statistical data and is not intended to meet objectives or suitability requirements of any specific individual or account.

All investments involve risk, including loss of principal. All data is presented in U.S. dollars.
Cash is cash and cash equivalents.
An investor cannot invest directly in an index.
Important Tax Information: Reaves Asset Management and its employees are not in the business of providing tax or legal advice to taxpayers. Any such taxpayer should seek advice based on the taxpayer’s own individual circumstances from an independent tax adviser.
Fees: Net performance reflects the deduction of advisory fees which are described in detail in our Form ADV Part 2A.
Please contact your financial professional, or click the following links, for a copy of Reaves’ Form ADV Part 2A and Form CRS.
Additional information about Reaves may be found on our website:  www.reavesam.com.
2023 © Reaves Asset Management (W. H. Reaves & Co., Inc.)

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