FYI: The market might be going gaga for tax reform, but there’s one sector that’s sitting out this latest rally: utilities. That’s just one more reason to tread carefully when looking for opportunity in the dividend-heavy group.
During the past month, the Utilities Select Sector SPDR exchange-traded fund (XLU) has fallen 2.5%, even as the S&P 500 has gained 4.2%. And while much of the upside in the market can be ascribed to the increasing likelihood that the corporate tax rate is slashed, much of utilities’ underperformance can be chalked up to the fact that most of these power companies won’t receive much of a boost at all.
That’s not all that should worry investors. Other factors, including rising interest rates and fires in California, have made the group more risky than their reputation would suggest.
Regards,
Ted
http://www.cetusnews.com/business/Tax-Reform-Bypasses-Utilities.Hy9Mu4fMz.html
