Income-focused exchange-traded funds have retreated this year, mirroring the performance of mainstream Wall Street indices like the Nasdaq 100 and S&P 500.
The popular Schwab US Dividend Equity ETF (SCHD) has dropped by over 12% from its highest point this year. It has also formed a death cross pattern, pointing to further declines in the near term.
Similarly, the JPMorgan Equity Premium Income ETF (JEPI) has dropped to $ 52.70, down 10.6% from its highest level this year. It has dropped, as have most companies in the S&P 500 index, especially those in the tech industry.
This article explores why the Cohen & Steers Infrastructure Fund (UTF) closed-end fund is a better investment at the current conditions.
Cohen & Steers Infrastructure Fund is less exposed to tariffs and tech
The first reason why I’d consider investing in the CEF fund in these market conditions is that its portfolio companies have no exposure to tariffs and technology stocks.
Instead, it is comprised of companies in the utility industry, which are not exposed to tariffs. Additionally, customers will continue to pay their water and electricity bills, regardless of whether there is a recession or not. Also, these companies have not been tariffed.
The top companies in the UTF fund are NiSource, a gas distribution company, NextEra Energy, Duke Energy, TC Energy, American Tower, National Grid, Southern Company, and Dominion Resources.
NextEra and Duke Energy are large utility companies that supply energy to millions of customers in the United States. American Tower is a REIT that offers cell towers to all companies in the telecommunications industry.
These companies are also not exposed to the artificial intelligence industry, which is showing signs of slowing down.
UTF Fund is beating the SCHD and JEPI funds
Furthermore, the Cohen & Steers Infrastructure Fund is outperforming the SCHD and JEPI ETFs. Its total return this year is 4.35%, higher than SCHD’s minus 7.5% and JEPI’s minus 6.70%.
The same performance has happened in the last twelve months as the UTF fund has had a total return of 18%. SCHD has remained unchanged during this period, while JEPI has increased by 1.56%.
This means that an investment in UTF would have generated a higher return than the two popular dividend funds. UTF’s total returns in the last 3 years was 6.48%, while SCHD rose by 5.38%. JEPI has jumped by 11.3% in this period.
UTF trades at a discount
Further, like other closed-end funds, Cohen & Steers Infrastructure Fund trades at a discount to its net asset value (NAV). Its NAV stands at $26.22, while its market price is $24.4. This results to a discount of 6.76%.
Its discount has widened due to the ongoing market volatility. This means that investors buying the UTF fund are paying a discount, giving them a margin of safety. In contrast, the SCHD ETF has a discount to NAV of 0.12%, while JEPI has 0,09%.
UTF Fund has better technicals
The SCHD ETF has formed a death cross, indicating that it may continue to decline in the near term. JEPI may also exhibit this pattern due to its exposure to technology companies.
Read more: Red alert: SCHD ETF just flashed a rare risky pattern
UTF, on the other hand, has rebounded from its year-to-date low of $22 to $24.5. It has moved above the 100-day and 50-day Exponential Moving Averages (EMA), a sign that bulls are in control.
Therefore, the fund is likely to continue rising as bulls target the year-to-date high of $25.75, which is 5.3% above the current level.
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