VPU holds US utility companies: regulated electric and gas utilities, multi-utilities, water utilities and independent power producers. Earnings are relatively stable because rates are set under regulation, and the sector pays higher dividends than most equity sectors. Utilities behave somewhat like long-duration bonds and tend to fall when interest rates rise quickly. The sector is investing in grid upgrades and new generation capacity, including renewables. Compared with XLU, VPU also includes small and mid-cap utilities.
