Electric Utilities Industry ETF

DEFINITION of 'Electric Utilities Industry ETF'

An exchange-traded fund that invests in companies which generate and distribute electric power. Electric utilities generally account for more than 80% of holdings of the largest utilities ETFs. However, since the balance is taken up by utilities that operate in other sectors such as gas, water and pipelines, these ETFs are better characterized as utilities ETFs.

BREAKING DOWN 'Electric Utilities Industry ETF'

Due to the nature of their business, most electric utilities have stable cash flows and high dividend payouts. Such defensive characteristics make utilities ETFs desirable investment candidates during market downturns, as well as during periods of low interest rates, low inflation and economic uncertainty.