Utilities ETF (FXU) Hits New 52-Week High

For investors seeking momentum, First Trust Utilities AlphaDEX ETF FXU is probably on the radar. The fund just hit a 52-week high and is up 34.69% from its 52-week low price of $29.29/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:

FXU in Focus

The underlying StrataQuant Utilities Index is a modified equal-dollar weighted index to objectively identify and select stocks from the Russell 1000 Index that may generate positive alpha relative to traditional passive style indices through the use of the AlphaDEX screening methodology. The product charges 64 bps in annual fees (See: All Utilities/Infrastructure ETFs).

Why the Move?

The utilities corner of the broad stock market has been an area to watch lately, given the dovish stance of the Fed, and interest rate cuts in September and November. Market expectation of another interest rate cut in December is acting as a key tailwind for the fund.

Utilities are less vulnerable to drastic market fluctuations, making them a defensive investment or safe haven during economic or political instability. Expectations of increasing uncertainty driven by President Trump’s economic proposals also bode well for the sector. Rising geopolitical tensions should also help boost the fund’s prospects.

More Gains Ahead?

Currently, FXU has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook. However, it might continue its strong performance in the near term, with a positive weighted alpha of 32.18 (as of Barchart.com), which gives cues of a further rally.

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