One of the first investments I ever purchased was a utility. Utilities generally are not growth investments, but they can be. One reason I like them is that they produce and deliver something that just about every family and business needs: electricity, gas and water. This makes them a less risky investment than many other sectors. That isn’t to say that utilities never go down in value. But they tend to have less long-term risk and provide a reasonable stream of income in the form of dividends.
Although I generally buy individual utilities, the less complicated way to get a slice of this sector is to buy an ETF like VPU or FUTY. VPU is presented as an example because it is one of the bigger utility ETFs. However, if you are a Fidelity Investments investor, you might want to consider FUTY.
VPU has a rational expense ratio, a great XTF rating, a decent dividend yield and good diversification. If you buy and hold for the long haul, it is wise to automatically reinvest the dividends.
Investing in broad index-based ETF’s that cover the S&P 500 or dividend focused ETF’s like VYM and SCHD before buying a sector ETF. Then consider funds that focus on the sectors that you find attractive as long-term investments. I believe utilities are one of many good choices for a more conservative investor.
XLF LINK: http://www.xtf.com/ETF-Ratings/VPU
Know Your Flocks & Herds 