5 Best Defensive ETFs to Buy Amid Recession Fears

4. Utilities Select Sector SPDR Fund (NYSE:XLU)

Utilities Select Sector SPDR Fund (NYSE:XLU) aims to provide investment results that track the price and yield performance of the Utilities Select Sector Index. As of June 8, the fund offers an expense ratio of 0.10% and assets under management of $16.4 billion, as well as a distribution yield of 2.73%. The ETF provides exposure to companies from the electric utility, water utility, multi-utility, independent power and renewable electricity, and gas utility sectors. The portfolio is fairly concentrated, with only 29 holdings. 

NextEra Energy, Inc. (NYSE:NEE), a provider of electric power to retail and wholesale customers in North America, occupies the top position in Utilities Select Sector SPDR Fund (NYSE:XLU)’s portfolio, representing 14.89% of the total holdings. It is also the biggest equity in the underlying index. 

On April 25, Credit Suisse analyst Nicholas Campanella initiated coverage of NextEra Energy, Inc. (NYSE:NEE) with an Outperform rating and an $87 price target. According to the analyst, NextEra Energy, Inc. (NYSE:NEE) is a robust U.S. utility and renewable developer based in Florida and is a “battleground stock in the wider renewable supply chain debate”. Despite short-term supply constraints, NextEra Energy, Inc. (NYSE:NEE) remains positioned to perform well amid an inflationary macro backdrop versus peers owing to its size and scale, noted the analyst, who sees the stock as fundamentally attractive.

In Q1 2022, 64 funds were bullish on NextEra Energy, Inc. (NYSE:NEE), up from 55 funds in the prior quarter. According to Insider Monkey’s data, Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 15.6 million shares worth $1.3 billion.