Virtus Reaves Utilities ETF (UTES)
UTES Charges 0.50% for AI Power Exposure: Is the Premium Worth It in 2026?
The Virtus Reaves Utilities ETF (NYSEARCA:UTES) is one of the only actively managed funds in the utilities category, and its 0.49% expense ratio sits near the top end of what utility investors will pay.
UTES: AI-Driven Power Demand Growth Is Still In Early Innings
The Virtus Reaves Utilities ETF is an actively managed fund with strong exposure to regulated utilities and independent power producers. UTES is positioned to benefit from surging electricity demand driven by AI data center growth, supporting a strong long-term growth outlook. Despite a modest 1.5% yield, UTES offers supercharged dividend growth potential and has outperformed passive utilities ETFs in recent years.
Virtus Reaves Utilities ETF Q1 2026 Commentary
The Virtus Reaves Utilities ETF increased 1.65% in the quarter, underperforming the S&P 500 Utilities Index, though it returned 25.49% over the last 12 months. Entergy and Meta significantly up-sized their existing generation development commitment by 5 gigawatts to support expanding data center development opportunities. Xcel Energy and Google announced a creative 1.9 GW partnership incorporating new renewables and long-duration energy storage to meet growing power demands.
UTES: Utilities Dashboard For March
Water utilities appear undervalued by 18% versus historical baselines, while electric/multi utilities are overvalued by 18%, partially offset by quality. Virtus Reaves Utilities ETF offers a compelling active alternative for utilities exposure, outperforming XLU since inception with the risk of a concentrated portfolio. 10 utility stocks were cheaper than their peers in March.
Virtus Reaves Utilities ETF Q4 2025 Commentary
Utility stocks modestly underperformed the S&P 500® Index during the quarter. The Fund declined 4.91% in the quarter, underperforming the S&P 500® Utilities Index (Utilities Index). DTE Energy, Duke Energy, WEC Energy, and OGE Energy were all top contributors, owing to trading in the Fund.
Virtus Reaves Utilities ETF Q3 2025 Commentary
Increasing electricity demand tied to artificial intelligence (AI) expansion and data center growth drove increasing load forecasts and capital spending expectations for many companies in the sector. The Fund advanced 10.64% in the quarter, outperforming the S&P 500® Utilities Index (Utilities Index). The Fund continued to benefit from its exposure to companies levered to AI-related power demand.
UTES: A Defensive AI Play
The Virtus Reaves Utilities ETF offers active, concentrated Utilities exposure with $1.4B AUM and a 0.49% expense ratio. UTES has outperformed passive peers like XLU since inception with only modestly higher volatility. Significant allocations to independent power producers position UTES to benefit from AI-driven power demand growth, despite higher cyclicality and volatility.
UTES: Increasing Power Demands Provide Continued Strong Tailwinds
Virtus Reaves Utilities ETF remains a buy, driven by strong performance and exposure to utilities benefiting from rising power demand and AI trends. UTES has outperformed utility peers and the S&P 500 Utilities Index, with concentrated holdings in high-growth names like VST, TLN, and CEG. While valuation and concentration risks exist, robust earnings growth and sector tailwinds justify continued optimism for UTES in growth portfolios.
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UTES: A Concentrated, Actively Managed Utility ETF Evolving Into A Growth Fund
UTES stands out as an actively managed utility ETF, outperforming peers by capitalizing on AI-driven electricity demand and focusing on independent power producers. The concentrated portfolio, led by skilled Reaves managers, has evolved into a growth-oriented utility ETF, but current valuations appear stretched after a recent rally. With a modest 1.6% yield, UTES isn't ideal for income investors; the Reaves Utility Income Fund (UTG) offers a 6.75% yield and similar management.
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The Recent Pullback Gives A Nice Entry Point For Investors In UTES
Virtus Reaves Utilities ETF is a buy after its recent 6% pullback. UTES is actively managed, outperforming other utility ETFs, with a 45.31% price appreciation in 2024 and a five-star Morningstar rating. The fund's top holdings are less concentrated than before, with new investments like CenterPoint Energy showing strong growth potential and favorable regulatory support.
UTES: This Could Change Everything (Downgrade)
AI-driven energy demands have boosted utility stocks, but DeepSeek's efficient AI approach questions future growth projections, impacting the Virtus Reaves Utilities ETF (UTES). UTES saw significant gains in 2024, led by top holdings like Constellation Energy and Vistra, but current high valuations may not be sustainable if projections change. Environmental and regulatory challenges complicate utility expansions, making it difficult for UTES to find alternative growth opportunities within its top holdings.
UTES: Better For Investing In Vistra And Constellation
Vistra Corp. and Constellation Energy have surged due to their roles in powering AI data centers, with Vistra's diversified energy mix and strong earnings performance driving its rally. The Virtus Reaves Utilities ETF offers a diversified investment in utilities powering AI infrastructures, providing lower valuation multiples and reduced idiosyncratic risk compared to individual stocks. UTES' top holdings, including NextEra Energy and Vistra, are well-positioned to meet rising energy demands, with significant investments in renewables and battery storage.
UTES: A Strong Performing ETF Thanks To Active Management
Virtus Reaves Utilities ETF has been benefiting from the ETF's active management, with Reaves being an infrastructure-focused investment firm. The managers have successfully positioned the fund into a concentrated portfolio to benefit from the rising demand for powering the AI revolution. UTES may not provide a distribution yield that is as attractive as its CEF counterpart, UTG, but they could complement each other well.
UTES: A Backdoor Into The AI Theme
The Virtus Reaves Utilities ETF is an actively managed ETF focused on the Utilities sector. UTES has delivered a stunning 57% return in the past year, driven by AI data center energy demand. However, despite impressive short-term gains, I am cautious about the UTES ETF and the AI investment theme, as I see similarities between AI and the dot-com bubble.
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UTES: The Right Fund In The Right Sector
Defensive sectors like real estate and utilities are outperforming in times of high volatility and falling yields. The Virtus Reaves Utilities ETF stands out for its active management and strong performance. The focus on only 20 stocks and heavy concentration on the top 2 holdings shows conviction by the management team and is an approach that can deliver outsized returns.
UTES: Active Management Is Working Big Time
The utilities sector is performing well and offers value for investors. Virtus Reaves Utilities ETF (UTES) is a strong option for active management in the sector. UTES has outperformed the passive Utilities Select Sector SPDR ETF (XLU) and has a unique composition of holdings.