Are Utility Stocks The New High Beta Sector?
Speaking to Benzinga, Timothy Anderson of MND Partners commented that utility stocks have demonstrated some of the most volatility in the market as institutional accounts with actuarial commitments "scramble to make their bogey."
Anderson noted that utility stocks, represented by funds like the Utilities SPDR (ETF) (NYSE: XLU) and Vanguard Utilities ETF (NYSE: VPU), have recovered and gained 2 percent after falling 5 percent over the prior two sessions. As such, it is worth examining the possibility that Utilities are the new high volatility sector.
"I think the reality is that there was a bit of a buying panic in the sector the last two weeks of 2014 that followed through into January as the 10-year yield plunged to 1.65 percent," Anderson said. "No doubt pension funds and others with actuarial contracted return have issues meeting those benchmarks in the fixed income market."
Anderson also adds that it is "very likely" some non-traditional equity investors are helping to create high demand for stocks with safe dividend yields.
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