Boring Beats Brilliant: How a Utilities ETF Has Quietly Trounced the S & P 500 in Nearly Every Recession This Century Quick Read – Vanguard Utilities Index Fund ETF Shares (VPU) has outperformed the S&P 500 during 2 of the last 3 recessions this century, returning +17% in 2007…
the S&P 500’s +3.53%, losing -27.94% in 2008 vs -38.49%, and gaining +1.04% in 2022 vs -19.44%. – AI data centers’ escalating demand for electricity and water is driving unexpected growth and stronger earnings for utilities that traditionally offer defensive stability with a 2.52% dividend yield and minimal competition in their municipal markets. – The analyst who called NVIDIA in 2010 just named his top 10 AI stocks. Get them here FREE
Although the US economy has not undergone a genuine depression since the first part of the 20th century under Presidents Herbert Hoover and Franklin D. Roosevelt, the less severe recession has emerged numerous four times since 2000: – 2001: The Dot-com bubble crash – 2007-2008: The subprime mortgage banking meltdown – 2020: The Covid-19 pandemic – 2022: “Technical” recession (2 consecutive quarters of negative GDP growth) During these economically turbulent periods, the S&P 500 took its lumps as well, and struggled to keep its head above water. Defensive stocks, which are defined as those supplying indispensable goods and services regardless of economic climate, such as utilities, food, personal care products, and medicines, often hold their own and even eke out decent gains during recessionary times.
A number of them, such as Walmart, Procter & Gamble, and Con Edison, are in the S&P 500 and played a role in its resilience. However, there is a relatively humdrum ETF that has soundly outperformed the S&P 500 during the last 2 of 3 recessions this century, (it didn’t start until 2004): the Vanguard Utilities Index Fund ETF Shares (NYSE: VPU). The analyst who called NVIDIA in 2010 just named his top 10 stocks.