VPU: VANGUARD UTILITIES INDEX FUND ETF SHARES
ETF Education Report: Vanguard Utilities Index Fund ETF Shares (VPU)
What this ETF is trying to do
The Vanguard Utilities Index Fund ETF Shares (VPU) is an exchange-traded fund that focuses on the utilities sector. This means it holds many different companies that provide essential services, like electricity and gas. Based on the top holdings provided, this fund includes companies such as NextEra Energy Inc, Southern Co, and Duke Energy Corp.
What the numbers show
When looking at an ETF, it is important to understand two different types of returns: price return and total return.
• Price Return: This measures only the change in the share price. For VPU, the year-to-date (YTD) price return is approximately -3.82%. The one-year price return was approximately -2.93%. However, over three years, the price return was a positive 26.75%.
• Total Return: This includes the share price change plus any cash distributions paid out to investors. The YTD total return is approximately -2.55%, and the one-year total return was approximately -0.28%. Over three years, the total return was a much higher 38.96%.
To give you an idea of price movement, the current price is $177.98. The estimated price from roughly one year ago was approximately $183.36.
Income and distribution explanation
Some investors look for ETFs that pay out cash, known as distributions. VPU has a distribution yield of approximately 2.90%. This means the cash distributed is about 2.90% of the ETF's price. The fund usually pays these out quarterly, and it has made 4 payments over the last 12 months. It is important to remember that a distribution yield is not the same as a total return.
NAV erosion explanation
"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). While a falling share price can sometimes be related to erosion, they are not the same thing. For VPU, the erosion-risk score is 94, which is labeled as "Stable / sideways," and the erosion severity is considered "good." There is no severe erosion-risk flag for this ETF.
Pros
• The fund has shown strong total returns over a three-year period (38.96%).
• It has a "good" erosion-risk rating, suggesting the price trend is relatively stable.
• It provides regular cash distributions.
Cons
• The price return has been negative for both the year-to-date and one-year periods.
• The total return has also been negative over the last year.
Beginner takeaway
When studying VPU, it is helpful to look at both the share price and the total return. While the share price has dipped recently, the total return (which includes dividends) tells a slightly different story. Always remember that high distributions are not a guarantee of profit, and you should look at the overall total return to see how the fund has performed.
Top Holdings
Structured portfolio holdings supplied by the ETF data provider. These figures are not generated by the AI article.
| # | Holding | Ticker | Weight |
|---|---|---|---|
| 1 | NEXTERA ENERGY INC | NEE | 11.78% |
| 2 | SOUTHERN CO | SO | 6.92% |
| 3 | DUKE ENERGY CORP | DUK | 6.34% |
| 4 | CONSTELLATION ENERGY CORP | CEG | 5.26% |
| 5 | AMERICAN ELECTRIC POWER CO INC | AEP | 4.52% |
| 6 | DOMINION ENERGY INC | D | 3.95% |
| 7 | SEMPRA | SRE | 3.76% |
| 8 | VISTRA CORP | VST | 3.26% |
| 9 | ENTERGY CORP | ETR | 3.20% |
| 10 | XCEL ENERGY INC | XEL | 3.17% |