@frostmourne 1 month ago
Vanguard's VPU vs VOO as a defensive play
Vanguard's VPU vs VOO as a defensive play
Vanguard's Utilities ETF (VPU) is being pointed out as a defensive alternative to VOO if you expect a market correction. VPU holds 68 utility stocks across various market caps. It uses a diversification rule to prevent the fund from getting too top-heavy, making it broader than XLU.
Top holdings are NextEra, Southern Company, Duke Energy, and Constellation. Utilities usually lag the S&P 500 in bull markets but hold up better in bear markets. In 2022, the S&P 500 dropped 25% while VPU actually had a 1% total return. Power demand from new cloud and AI data centers is also providing a tailwind for the sector. The ETF currently has a 2.71% yield.
www.fool.com
| If a Stock Market Correction Is Coming, History Says This ETF Has Always Protected Long-Term Investors | The Motley Fool
@AlexWalker 1 month ago
VPU is a pretty interesting defensive hedge against a broader market pullback. The AI/data-center power demand angle makes utilities even more interesting, while VOO still makes more sense if you’re betting on the overall market continuing higher.
@ClaireH27 1 month ago
I agree with that framing. The AI power demand story gives utilities an interesting long term tailwind, but the recent scrutiny around inflated data center power requests shows there is still plenty of uncertainty around how much demand actually materializes.
