Utilities Select Sector SPDR Fund (XLU): Complete Beginner's Guide
Utilities Select Sector SPDR Fund (XLU) is a utilities sector ETF from State Street Global Advisors with an expense ratio of 0.09% and $17.0B in assets under management. Our Beginner Suitability Score: 8.5/10 (Great for Beginners). 5-year annualized return: 5.80%.
Last updated: April 2026
State Street Global Advisors • Utilities Sector
Expense Ratio
0.09%
AUM
$17.0B
Dividend Yield
2.90%
Inception
1998
Beginner Score
8.5/10
What is Utilities Select Sector SPDR Fund?
XLU holds the utility companies from the S&P 500, including electric, gas, water, and renewable energy providers. Utilities are considered the most defensive equity sector because people always need electricity and water regardless of the economy. Beginners attracted to stability and income often use XLU as a bond alternative, since utilities pay reliable dividends and tend to fall less than other stocks during downturns.
XLU is managed by State Street Global Advisors and has been available since 1998. With $17.0B in assets under management, it's a well-established fund with strong institutional backing. The fund charges an expense ratio of 0.09%, which means for every $10,000 you invest, you pay approximately $9 per year in management fees.
XLU at a Glance — Key Metrics
| Expense Ratio | 0.09% |
| Total Holdings | 31 |
| P/E Ratio | 19.8 |
| Beta | 0.55 |
| Dividend Yield | 2.90% |
| AUM | $17.0B |
| Inception Year | 1998 |
| Issuer | State Street Global Advisors |
Top 10 Holdings in XLU
XLU holds 31 different securities. Here are the largest positions that make up the core of this fund:
| # | Company | Ticker | Weight |
|---|---|---|---|
| 1 | NextEra Energy Inc. | NEE | 14.80% |
| 2 | Southern Co. | SO | 8.80% |
| 3 | Duke Energy Corp. | DUK | 7.80% |
| 4 | Sempra Energy | SRE | 5.80% |
| 5 | Dominion Energy Inc. | D | 5.50% |
| 6 | American Electric Power | AEP | 5.20% |
| 7 | Exelon Corp. | EXC | 4.80% |
| 8 | Constellation Energy | CEG | 4.50% |
| 9 | Xcel Energy Inc. | XEL | 3.80% |
| 10 | WEC Energy Group Inc. | WEC | 3.50% |
XLU's top holding is NextEra Energy Inc. (NEE) at 14.80%, followed by Southern Co. (SO) at 8.80% and Duke Energy Corp. (DUK) at 7.80%. The top 10 holdings account for 64.50% of the fund's 31 total positions.
View data table
| Rank | Company | Ticker | Weight |
|---|---|---|---|
| 1 | NextEra Energy Inc. | NEE | 14.80% |
| 2 | Southern Co. | SO | 8.80% |
| 3 | Duke Energy Corp. | DUK | 7.80% |
| 4 | Sempra Energy | SRE | 5.80% |
| 5 | Dominion Energy Inc. | D | 5.50% |
| 6 | American Electric Power | AEP | 5.20% |
| 7 | Exelon Corp. | EXC | 4.80% |
| 8 | Constellation Energy | CEG | 4.50% |
| 9 | Xcel Energy Inc. | XEL | 3.80% |
| 10 | WEC Energy Group Inc. | WEC | 3.50% |
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XLU Performance History
Here's how XLU has performed over different time periods. Remember that past performance doesn't guarantee future results, but it gives you a sense of the fund's track record:
YTD
1.40%
1 Year
14.20%
3 Year
4.50%
5 Year
5.80%
10 Year
7.20%
XLU has returned 5.80% annualized over 5 years and 7.20% over 10 years. YTD return is 1.40%.
View data table
| Period | Return |
|---|---|
| YTD | 1.40% |
| 1 Year | 14.20% |
| 3 Year | 4.50% |
| 5 Year | 5.80% |
| 10 Year | 7.20% |
Beginner Suitability Score: 8.5/10
Our proprietary Beginner Suitability Score evaluates ETFs based on five factors that matter most to new investors: fees, volatility, diversification, dividend history, and track record length.
XLU scores 8.5/10 because it has very low fees, shows lower-than-average volatility, focuses on 31 selected holdings, and has been available since 1998, giving it a proven track record.
How to Buy XLU — Step by Step
- Open a brokerage account — We recommend Fidelity, Charles Schwab, or Vanguard for ETF investing. All offer $0 commissions on ETF trades.
- Fund your account — Transfer money from your bank. You can start with as little as $1 if your broker offers fractional shares.
- Search for "XLU" — Use the search bar in your brokerage platform to find Utilities Select Sector SPDR Fund.
- Place your order — Choose "Market Order" for simplicity or "Limit Order" if you want to set a specific price. Enter how many shares (or dollar amount) you want to buy.
- Set up automatic investing — Most brokers let you schedule recurring purchases (e.g., $100/month on the 1st). This is dollar cost averaging in action.
XLU Sector Allocation
Here's how XLU distributes its investments across different sectors of the economy:
XLU's largest sector allocation is Electric Utilities at 56.5%, followed by Multi-Utilities at 21.8% and Gas Utilities at 7.8%.
View data table
| Sector | Weight |
|---|---|
| Electric Utilities | 56.5% |
| Multi-Utilities | 21.8% |
| Gas Utilities | 7.8% |
| Water Utilities | 5.5% |
| Renewable Electricity | 4.8% |
| Independent Power | 2.5% |
| Other Utilities | 1.1% |
Dollar Cost Averaging Into XLU
Here's what consistent monthly investing could look like over time, assuming an average annual return of 8% (approximate historical stock market average):
| Monthly | 10 Years | 20 Years | 30 Years |
|---|---|---|---|
| $100/mo | $18,417 | $59,295 | $150,030 |
| $250/mo | $46,041 | $148,237 | $375,074 |
| $500/mo | $92,083 | $296,474 | $750,148 |
*Projections assume 8% average annual return with monthly compounding. Actual returns will vary. Past performance doesn't guarantee future results.
Fee impact: With XLU's expense ratio of 0.09%, a $10,000 investment would lose approximately $771 to fees over 20 years compared to a zero-fee investment. This is a reasonable fee level for the value provided.
XLU's expense ratio of 0.09% costs $771 on a $10,000 investment over 20 years (assuming 8% annual return). Without fees, the investment would grow to $46,610 instead of $45,839.
View data table
| Year | Without Fees | With Fees | Fee Cost |
|---|---|---|---|
| 0 | $10,000 | $10,000 | $0 |
| 5 | $14,693 | $14,632 | $61 |
| 10 | $21,589 | $21,410 | $179 |
| 15 | $31,722 | $31,327 | $395 |
| 20 | $46,610 | $45,839 | $771 |
Pros and Cons of XLU
Pros
- ✓Lowest beta of any equity sector ETF at 0.55, providing excellent downside protection
- ✓Reliable dividend income from regulated utilities with predictable cash flows
- ✓Utilities benefit from growing electricity demand driven by AI data centers and EVs
- ✓Inexpensive 0.09% expense ratio for a targeted sector allocation
Cons
- ✗Historically low growth means utilities lag the broader market during strong bull markets
- ✗Very sensitive to interest rates since utilities compete with bonds for income investors
- ✗Concentrated in NextEra Energy, which alone makes up about 15% of the fund
XLU vs Similar ETFs
See how XLU stacks up against similar funds:
Frequently Asked Questions
Is XLU a good ETF for beginners?▾
XLU has a Beginner Suitability Score of 8.5/10 on our scale. This makes it a strong choice for new investors due to its low fees and focused strategy.
What is the expense ratio of XLU?▾
XLU has an expense ratio of 0.09%. This means for every $10,000 you invest, you pay approximately $9 per year in fees. This is considered very low and cost-efficient.
How much money do I need to invest in XLU?▾
You can invest in XLU with as little as $1 through brokers that offer fractional shares (like Fidelity, Schwab, or Robinhood). There is no minimum investment required beyond the share price itself, which changes daily. Dollar cost averaging — investing a fixed amount regularly — is a popular strategy.
Does XLU pay dividends?▾
Yes, XLU pays dividends with a current yield of approximately 2.90%. Dividends are typically paid quarterly and can be reinvested automatically through most brokers.
What are the top holdings in XLU?▾
The top holdings in XLU include NextEra Energy Inc. (14.80%), Southern Co. (8.80%), Duke Energy Corp. (7.80%), and more. The fund holds 31 total positions, providing focused exposure to selected companies.
What sectors does XLU invest in?▾
XLU's largest sector allocations are Electric Utilities (56.50%), Multi-Utilities (21.80%), Gas Utilities (7.80%). This sector distribution shows a focus on electric utilities stocks.
How much do XLU's fees cost over time?▾
With an expense ratio of 0.09%, a $10,000 investment in XLU would lose approximately $771 to fees over 20 years (assuming 8% annual returns). This is a reasonable fee level.