Defensive Utilities 

A strategy for investors seeking growth and income from a portfolio of utility stocks.

Strategy Description

The objective of the Defensive Utility model is to provide investors with dividend income and growth of capital.

The model combines the traditional dividend power of utilities with a ranking system.

Utility companies are a traditional favorite investor sector due to their large dividend yields and perceived low risk.  The low risk comes from the high demand for utilities based on a decreased competition as a result of government regulation.  However, not all utility companies are great investments and there may be times when they fall out of favor.  Our Defensive Utility model screens these stocks for the top performers as a better approach to investing in this sector.

The model is rebalanced weekly.


Sharpe Ratio – the average return earned in excess of the risk-free rate.  A higher Sharpe Ration is better

Risk-Free Rate – represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.

Sortino Ratio – another measure of risk that takes into account the downside deviation of the asset.  A higher Sortino Ratio is better.

What is Drawdown?

Drawdown is the measure from the highest high to the lowest low or peak to trough during a specific time period.  It is an important measurement of risk.  A larger drawdown requires a more significant increase in the security to recover.

Volatility measures the change in the price of an investment.  The higher the volatility, the higher the difference between the high and the low of an investment’s price.

The 12 Month Rolling ROR is the compound rate of return for the last 12 months.  The rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.

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