Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| ETF
Spotlight -- Utilities SPDR (XLU) |
Published: January 19, 2004
The Utilities SPDR (XLU, $23.33) is an exchange-traded
fund that tracks the price of a basket of utility stocks. Although the
companies in the index are almost exclusively electric power utilities,
they no longer represent a purely low-risk, defensive dividend play like
they did in the past. Also included in the index are firm such as the
Williams Companies (WMB, $11.00), a pipeline and energy trading company
that got caught up in some of the same difficulties that led to Enron's
(ENRNQ, $0.071) demise. Additionally, many utilities have become
involved in the search for alternate fuel sources (such as new types of
batteries). This has led to far greater price volatility and a
speculative edge to their stock returns.
This change in the character of the utility index has
led to a greater correlation with the overall stock market than in the
past. However, that correlation still remains in the low-60% range with
the broad stock market, and just 50% when compared with the Nasdaq.
However, unlike in the past, the utility index now has little
correlation with the bond market, as evidenced by its negative
correlation with the Corporate Bond iShares (LQD, $112.80) and the 20+
Year Treasury Bond iShares (TLT, $87.61).
| Utilities
SPDR (XLU) |
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| Type: |
Industry
Sector |
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| Similar funds: |
Corporate
Bond iShares (LQD) |
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20+
Year Govt. Bond iShares (TLT) |
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| Options?: |
Yes,
very illiquid |
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| Performance
Data |
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| 52-week High: |
$23.50 |
1/15/2004 |
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Annualized
return since: |
| 52-week Low: |
$17.00 |
2/12/2003 |
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One-year |
21.87% |
| 2003 Return: |
25.97% |
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Three-year |
-5.49% |
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Five-year |
-1.32% |
| Dividends: |
$0.80 |
past
12-mos |
Life of fund* |
-1.77% |
| Expense Ratio: |
0.28% |
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*
- Started trading 12/22/1998 |
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| Correlation
Data* |
(1/02/02-12/31/03) |
Holdings* |
(as of
1/13/2004) |
| Dow
Jones Industrials |
62.1% |
|
Southern
Co. (SO) |
7.49% |
| S&P 500 |
|
64.9% |
|
Exelon
(EXC) |
7.34% |
| Nasdaq
Composite |
55.1% |
|
Dominion
Resour. (D) |
6.93% |
| Nasdaq-100 |
|
52.8% |
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Duke
Energy (DUK) |
6.42% |
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Entergy
(ETR) |
4.43% |
| LQD^ |
|
-8.2% |
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Amer.
Elec. Pwr. (AEP) |
4.21% |
| TLT^ |
|
-23.7% |
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FirstEnergy
(FE) |
4.14% |
| ^
- Correlation from 7/26/02-12/31/03 |
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FPL
Group (FPL) |
4.11% |
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PG&E
(PCG) |
3.86% |
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Progressive
Energy (PGN) |
3.72% |
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*
Percent top ten are of total |
52.65% |
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| Average
Daily Volume |
|
Average
Daily Price Range |
| Dec-03 |
610,923 |
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Dec-03 |
1.2% |
| 2003 |
572,097 |
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2003 |
1.6% |
| 2002 |
251,496 |
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2002 |
2.6% |
| *
- Correlation measures how closely the two items track each
other |
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*
Includes prior day's close (true range) |
HOW TO MAKE MONEY IN XLU THIS
YEAR
There is no part of the stock market that cannot be described as
overbought right now, and XLU is no exception. Still, unlike some of the
more volatile market sectors, my analysis indicates that XLU still has
room for another leg higher in the near term. The Utility SPDR is
probably being aided by the shift in thoughts regarding when the Fed
might next hike interest rates (it now looks like future rate increases
might be delayed), although as I already told you, the fund's
correlation with the bond market is negative. However, lower interest
rates, for these often highly indebted firms, do help their bottom line.
I believe XLU can rally to $24.50 in the next month or
two before the fund enters into a minor correction. Ultimately, a move
north of $25.00 is likely later this year. Only after that point would I
start to worry about a major fall.
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Investing Doesn't Get Any Easier Than This |
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