Q#1 = do you agree that this is a good fit? When I check out the rankings of other ETFs, ZUT is just "ok". However, ZUT compares very well against XUT and I like the "equal weight" approach. I also like the roughly 30% "renewables" content within ZUT. Are there other Utility ETFs that I should consider?
Q#2 = some of the metrics I look at are P/B (1.7), P/E (22.8), ROE (5.4%). Historically, is ZUT cheap or expensive right now?
Q#3 = looking at the technicals, from a value perspective, it looks to my amateur eyes that now is a good time to buy. Agree?
Thanks for your help...much appreciated.
Steve
1. There are a few main Utilities ETFs for the Canadian landscape, and between ZUT and XUT, we prefer ZUT due to its larger AUM ($437M vs. XUT at $280.5M), and its higher yield (ZUT 3.8% and XUT 3.5%). Both ETFs have the same MER of 0.61%, and both have the same number of holdings, although, ZUT has performed slightly better over the years. We like ZUT here.
2. Looking at the top underlying holdings of the funds, most names have held up well over the past year, as investors fled to the defensive nature of the utilities sector. Given this, we would consider the ETF to be near fair value or slightly above its historical average.
3. Some of its recent weakness is due to AQN, but largely, we think the drawdown in ZUT represents a good buying opportunity for long-term investors.