Virtus Reaves Utilities ETF (UTES)UTES

Virtus Reaves Utilities ETF (UTES): A Deep Dive

Profile: The Virtus Reaves Utilities ETF (UTES) invests primarily in equity securities of U.S. utility companies. It seeks to provide investment results that, before fees and expenses, generally correspond to the price and performance of the Reaves Utility Income Index. The ETF adopts a passive management approach, aiming to track the performance of the chosen index.

Objective: The primary objective of UTES is to generate current income and capital appreciation through investments in utility stocks. The ETF targets long-term investors seeking exposure to the utilities sector and income generation potential.

Issuer:

• Company: Virtus Investment Partners, Inc.
• Reputation and Reliability: Virtus is a well-established investment management firm with over 25 years of experience and over $160 billion in assets under management (AUM) as of September 2023.
• Management: The ETF is managed by an experienced team at Reaves Asset Management, a subsidiary of Virtus specializing in income-oriented strategies.

Market Share: UTES holds a relatively small market share within the utilities sector ETF landscape. As of September 2023, its AUM is approximately $434 million, representing less than 1% of the total assets invested in utilities ETFs.

Total Net Assets: As of September 2023, UTES has approximately $434 million in total net assets.

Moat:

• Experienced Management: The ETF benefits from the expertise of Reaves Asset Management, a firm with a strong track record in managing income-oriented strategies.
• Passive Approach: The passive management style reduces costs compared to actively managed funds.

Financial Performance:

• Historical Returns: UTES has generated positive returns over the past 1, 3, and 5 years, outperforming the broader market. Its annualized returns since inception (2015) are 10.62%, exceeding the S&P 500's 9.51% during the same period.
• Benchmark Comparison: UTES has consistently outperformed its benchmark, the Reaves Utility Income Index, over the past 1, 3, and 5 years.

Growth Trajectory: The utilities sector is generally considered a defensive sector with relatively stable growth prospects. UTES is expected to follow a similar trajectory, benefiting from the consistent demand for utilities services.

Liquidity:

• Average Trading Volume: UTES has an average daily trading volume of approximately 22,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The ETF's bid-ask spread is typically tight, averaging around 0.02%, suggesting efficient trading.

Market Dynamics: Factors affecting UTES include economic growth, energy prices, interest rates, and government regulations impacting the utilities sector.

Competitors:

• Utilities Select Sector SPDR Fund (XLU): 19.78% market share
• Vanguard Utilities ETF (VPU): 18.95% market share
• iShares U.S. Utilities ETF (IDU): 13.05% market share

Expense Ratio: UTES has an expense ratio of 0.35%, which is below the average for utilities sector ETFs.

Investment Approach and Strategy:

• Strategy: UTES passively tracks the Reaves Utility Income Index, investing in a diversified portfolio of U.S. utility stocks.
• Composition: The ETF primarily holds large-cap utility stocks, with a focus on companies with strong dividend payouts.

Key Points:

• Seeks current income and capital appreciation through utility stocks.
• Passively managed, aiming to track the Reaves Utility Income Index.
• Experienced management team with a focus on income-oriented strategies.
• Outperformed the broader market and benchmark index in recent years.
• Relatively low expense ratio compared to peers.

Risks:

• Volatility: The utilities sector is generally less volatile than the broader market, but it can still experience periods of price fluctuations.
• Market Risk: UTES is exposed to risks associated with the overall stock market and the utilities sector specifically, such as changes in interest rates, economic conditions, and regulatory changes.
• Dividend Risk: Dividend payments from utility companies can fluctuate depending on factors like earnings and regulatory decisions.

Who Should Consider Investing:

• Investors seeking income generation through dividend payments.
• Investors with a long-term investment horizon.
• Investors looking for exposure to the utilities sector with a focus on dividend-paying companies.
• Investors comfortable with moderate volatility.

Fundamental Rating Based on AI: 8/10

Justification: UTES exhibits strong fundamentals based on its experienced management team, consistent outperformance, and relatively low expense ratio. While its market share is currently small, its focus on income generation and exposure to a generally stable sector make it an attractive option for income-oriented investors. However, investors should be aware of the inherent risks associated with the utilities sector and the potential for market volatility.

Resources:

• Virtus Reaves Utilities ETF website: https://www.virtus.com/etfs/us/en/etf-overview?銘柄コード_short=UTES
• Morningstar: https://www.morningstar.com/etfs/arcx/utes/quote
• ETF.com: https://www.etf.com/etf-profile/utilities-equity/utes

Disclaimer: This information is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.