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Tap Into Defense & Long-Term Opportunities With Utilities

BY | ETF Database
8:47 am ET 08/25/26 | 19 VIEWS
  • Related Symbols
  • XLU
Traditionally speaking, when advisors and investors have thought about investing in utilities, it oftentimes is done for defensive purposes.Key Takeaways: Utilities tend to be added to portfolios for their defensive advantages amid inflation, but the sector offers more potential than meets the eye. This sector is going to be a key facilitator of the AI buildout, given how necessary a stronger energy grid will be for all the new AI data centers being built. Those looking to gain low-cost exposure to the utilities sector may wish to consider the State Street Utilities Select Sector SPDR ETF (XLU A). This is due to the inelastic demand of many areas of the utility industry. Providers of electricity, water, and gas have oftentimes benefited from how their services are oftentimes always in need by consumers. As such, these companies have had a much easier time passing costs down to customers in periods of inflation. Given that the threat of inflation has not exactly disappeared as of yet, there is still a good case for investing in utilities for portfolio defense. However, there are also long-term growth opportunities within the sector that are worth talking about. Utilities are quite well-positioned for growth in the coming years. This is due in large part to the AI buildout, in which tech giants are looking to lead the AI space through new data centers. In order to keep up with the aspirations of the tech sector, utility companies will require significant new investments. This includes expanding power grids, transmission lines, maintenance operations, and more. See More: Target vs. Lowe’s: A Tale of 2 Retail Q2sSupercharge Utilities Exposure with XLUPutting this together, targeted utilities exposure offers two distinct perks. If the economy sours, utilities can help protect against risk through dividends and inelastic demand. Meanwhile, the sector is well-positioned to benefit from the growing need for power to fuel the AI buildout. The State Street Utilities Select Sector SPDR ETF (XLU A) can help investors looking to tap into this opportunity set. With a low cost of 8 basis points, XLU focuses its exposure on utilities companies within the S&P 500. XLU’s track record is offering good results in terms of both yield and returns. As of August 21, 2026, XLU has a 30 day SEC yield of 2.85%. Meanwhile, the fund’s NAV is also up 5.21% year to date, as of July 31, 2026. For more news, information, and analysis, visit our Sector Investing Content Hub.

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