The utility sector enjoyed its strongest winning streak in more than 15 years last month, emerging as the month’s standout performer despite broader market attention being focused on AI and mega-cap tech stocks. The stocks in the sector logged a consecutive seventh-month gain, reflecting a rare period of sustained sector confidence, underpinned by both short-term demand and structural tailwinds.
Reaves Utilities ETF UTES has emerged as the biggest winner, jumping 8.6% in July. It was followed by gains of 6.8% for Invesco Dorsey Wright Utilities Momentum ETF PUI, 6% for Invesco S&P 500 Equal Weight Utilities ETF RSPU and 5.4% each for First Trust Utilities AlphaDEX Fund FXU and Fidelity MSCI Utilities Index ETF FUTY (see: all the Utilities ETFs here).
What’s Driving the Rally?
Surging Power Demand: Extreme heat across the United States triggered a spike in residential power consumption (air conditioning and refrigeration lifted volumes for utility companies) during the month. Additionally, an unprecedented jump in electricity usage from AI training and data centers to electric vehicle charging is driving demand. Research forecasts electricity demand to grow by ~55% between 2020 and 2040, compared to just 9% over the previous two decades.
AI Paving the Growth: Utilities serving data-center clients like Amazon AMZN, Microsoft MSFT and Meta META are negotiating infrastructure deals where those tech firms fund expansions. For example, American Electric Power AEP locks in infrastructure costs with data centers and foresees 28% earnings growth by 2028, while Entergy projects 13% annual industrial sales growth.
Rate Requests on the Rise: Utilities have filed roughly $29 billion in rate increase requests through the first half of 2025, nearly double the prior year, driven by rising wholesale costs, aging grids and infrastructure investment needs.
Defensive Investment: Investors are rotating into utilities as a defensive haven amid broader market uncertainty. Utilities are traditionally seen as a safe harbor due to their consistent and often generous dividend payouts, which appeal to income-focused investors. The sector benefits from a high degree of regulatory oversight, which provides clarity on rate adjustments and helps ensure a steady stream of revenue. These regulated returns, combined with the essential nature of utility services like electricity, gas and water, contribute to highly predictable earnings, even during economic slowdowns. As volatility rises in other areas of the market, utilities offer a compelling blend of lower risk, income generation and operational resilience (read: 5 Factors to Play Defensive Now: ETFs in Focus).
Solid Industry Fundamentals: The sector continues to benefit from an ever-increasing population, which is pushing up demand for utility supplies like water, gas and electricity. The increased adoption of electric vehicles will also boost electricity demand for companies within the utilities sector.
ETFs in Focus
Reaves Utilities ETF (UTES)
Reaves Utilities ETF is the only actively managed ETF that seeks to provide returns through a combination of capital appreciation and income, primarily through investments in utility stocks. It holds 22 stocks with a double-digit concentration on the top three firms. UTES has AUM of $740.7 million and trades in an average daily volume of 153,000 shares. It charges 49 bps in annual fees.
Invesco Dorsey Wright Utilities Momentum ETF (PUI)
Invesco Dorsey Wright Utilities Momentum ETF offers exposure to 34 companies that are showing relative strength (momentum) and tracks the Dorsey Wright Utilities Technical Leaders Index. Electric utilities and multi-utilities account for 42% and 25.2% of the assets, respectively, while gas utilities round off the next spot with a double-digit exposure. Invesco Dorsey Wright Utilities Momentum ETF charges 60 bps in annual fees and sees a light volume of around 5,000 shares on average. It has AUM of $75 million.
Invesco S&P 500 Equal Weight Utilities ETF (RSPU)
Invesco S&P 500 Equal Weight Utilities ETF offers exposure to 33 equal-weighted companies in the utilities sector of the S&P 500 Index and tracks the S&P 500 Equal Weight Utilities Plus Index. Electric utilities and multi-utilities account for 54.4% and 32.1% of the assets, respectively, while independent power and renewable electricity round off the next spot with 7.2% exposure. Invesco S&P 500 Equal Weight Utilities ETF charges 40 bps in annual fees. It has AUM of $447.7 million and trades in an average daily volume of 44,000 shares.
First Trust Utilities AlphaDEX Fund (FXU)
First Trust Utilities AlphaDEX Fund employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index. It follows the StrataQuant Utilities Index, holding 40 stocks in its basket. First Trust Utilities AlphaDEX Fund has amassed $1.7 billion and charges 63 bps in annual fees. Volume is good as it exchanges 277,000 shares in hand per day (read: 5 Sector ETFs Set to Power Q2 Earnings Growth).
Fidelity MSCI Utilities Index ETF (FUTY)
Fidelity MSCI Utilities Index ETF provides exposure to 67 utility stocks with AUM of $2 billion. This is done by tracking the MSCI USA IMI Utilities Index. Here too, electric utilities and multi utilities are the top two sectors with 60.8% and 24% share, respectively. Fidelity MSCI Utilities Index ETF has an expense ratio of 0.08%, while the average daily volume is good at 162,000 shares a day.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
Invesco Dorsey Wright Utilities Momentum ETF (PUI): ETF Research Reports
First Trust Utilities AlphaDEX ETF (FXU): ETF Research Reports
Fidelity MSCI Utilities Index ETF (FUTY): ETF Research Reports
Virtus Reaves Utilities ETF (UTES): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
Invesco S&P 500 Equal Weight Utilities ETF (RSPU): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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