Vanguard Utilities ETF

VPU

Market cap $8.15B

As AI-fueled gains spark bubble warnings, investors are eyeing defensive ETFs in consumer staples, utilities and healthcare for safety.

Utilities have always had a reputation for being a "sleepy" corner of the stock market. Steady, predictable dividend payers one bought late in the bull market to preserve a portfolio.

Dividend stocks and exchange-traded funds (ETFs) with high yields are excellent ways to generate passive income. But even a high-yield passive income stream doesn't look all that impressive when the S&P 500 (^GSPC 0.59%) is notching big-time returns.

AI's energy-hungry data centers are fueling a surge in utility ETFs, with funds like XLU, VPU, IDU, and FUTY outpacing sector growth.

This article provides a top-down analysis of the utilities sector based on fundamental metrics. Water utilities are slightly undervalued versus historical averages, while electricity/multi-utilities are overvalued but above the quality baseline. Vanguard Utilities Index Fund ETF Shares is equivalent to XLU based on long-term performance, but XLU is preferable to VPU for trading due to higher liquidity.

Looking for broad exposure to the Utilities - Broad segment of the equity market? You should consider the Vanguard Utilities ETF (VPU), a passively managed exchange traded fund launched on January 26, 2004.

The S&P 500 (^GSPC -0.64%) is having another great year, up 9.9% year to date at the time of this writing. But it may surprise investors to learn that the seemingly boring utility sector is doing even better.

Choices, choices. Baskin-Robbins is famous for offering 31 flavors of ice cream.

When investors think about utilities, they most likely think something along the lines of, "boring dividend stocks." That's a legitimate view of the sector, which is known for providing reliable dividends.

The smartest investors don't flock to hot sectors without taking into consideration the opportunities and the risks. If you are looking for a Vanguard exchange-traded fund (ETF) to buy today, with $1,000 or $10,000, you could invest in tech stocks -- or you could buy into a sector that's supplying something vital to the technology sector.