One of the clear-cut trends of 2014 has been lower, not higher, interest rates. The conflict in Ukraine has clearly created even greater demand for U.S. Treasuries, as the 10-year yield is now 40 basis points lower than it was at the start of 2014. When the 10-year moves from 3.01% to 2.61% — when the 10-year might drop even more — the spread between utility dividends widens. More specifically, they widen until equity investors take a bit more risk by scooping up high yielding utility stocks.
What makes FXU unique is the tracking of the AlphaDEX index — an index of companies with verifiable revenue growth, return on assets and price-to-book (P/B). The collective price-to-sales for FXU is 1.2 and the P/B is 1.4. Over a 1-year period and a 5-year period, FXU has outperformed its big brother, SPDR Select Sector Utilities (XLU).