Holdings: NextEra Energy, Duke Energy, Southern Company, Dominion Energy, and more
Managed by: Vanguard
Risk level: Conservative
Monopoly players know this: Utilities like Electric Company and Water Works are a reliable way to keep your game going. They don’t have the glitzy cache of Pacific Avenue or Park Place but they’re a steady investment that can solidify your strategy.
While some players only break for Boardwalk, wise boardgamers know that owning these utilities can pay off in the long run. By owning both, you collect ten times the roll of the dice for any player who lands on them. Best of all, they can be had for just $150 (in Monopoly money) each, according to the rules of the game.
In the real world, utilities can can also make an important addition to an investment portfolio.
The demand for electricity could increase nearly 20% from 2017 to 2040
If you’re interested in harnessing the power of utilities like electric, water and telephone lines, you may connect with High Voltage, an exchange-traded fund (ETF) on Stash.
What’s a utility?
Utilities are corporations that provide important services that keep the modern world working: think water, electricity, telephone service, gas, or sewer infrastructure. Utilities can be either publicly or privately owned, but because everyone needs access to the services they offer, they are regulated by either state or federal authorities.
The U.S. economy relies on utilities
The utilities industry is critical to the economy–all homes and businesses need its power to function. Imagine an off-the-grid world without running water, electricity or the ability to pick up the phone and dial. Our lives would be very different without utilities.
What’s more, the utilities sector means jobs. It employs about 500,000 people in the U.S., as of 2017, according to the Department of Labor.
The future is electric
The need for power is set to keep growing. The demand for electricity could increase nearly 20% from 2017 to 2040, according to the Edison Electric Institute, a trade association that represents investor-owned electricity companies.
In addition to providing much-needed services, utilities are a form of infrastructure. Besides delivering electricity, for example, a utility will build the dam associated with producing the energy.
What’s in the High Voltage ETF?
The High Voltage ETF on Stash invests in privately-owned utilities that produce electricity, natural gas, and water. Nearly 60% of the stocks held in the fund are for electricity producers, according to Vanguard, which has created the fund.
Also included are independent power producers that supply energy to larger utilities, as well as multi-line providers, which operate combinations of utilities, most commonly natural gas and electricity.
High Voltage owns stock in 75 of the biggest U.S. utilities, including American Electric Power, Duke Energy, PG&E, and Southern Company.
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Have an eye on climate change? Increasingly utilities don’t just rely on fossil fuels like coal and natural gas, which are indicated in global warming, to produce power.
California’s premier utility PG&E, for example, derives about a third of its total energy output from renewable sources including plant-based sources, water, wind, and solar. Similarly, Duke Energy, per its most recent annual report, added 550 megawatts of power from wind and solar sources in 2016, which is enough to power more than half a million homes.
Are there risks?
Utilities are highly regulated, so they are often considered stable businesses for investment. However, the trend toward deregulation of utilities could create more volatility.
This fund could help you diversify, as only about 3% of the companies in the S&P 500–which contains some of the largest and most commonly traded stocks–are utilities.
- Utilities can make a valuable addition to your portfolio.
- Everyone relies on the services that utilities provide, such as water, electricity, or sewage.
- Plans to deregulate and build out infrastructure may benefit the utilities industry.
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