If you want the broader ETF structure before adding a defensive sector tilt, start with our ETFs and index funds hub.
Best Utility ETFs Listed on the TSX
| ETF | Ticker | MER | Yield | Holdings | Distribution | Strategy |
|---|
| BMO Equal Weight Utilities | ZUT | 0.61% | ~4.5% | 15 | Monthly | Equal-weight Canadian utilities |
| iShares S&P/TSX Capped Utilities | XUT | 0.61% | ~4.0% | 15 | Monthly | Market-cap weighted TSX utilities |
| Harvest Equal Weight Global Utilities Income | HUTL | 0.45% | ~6.0% | 30+ | Monthly | Global utilities, covered call overlay |
| Hamilton Enhanced Utilities | HUTS | 0.65% | ~6.5% | 15 | Monthly | 1.25x leveraged Canadian utilities |
US-Listed Utility ETFs (Accessible from Canada)
| ETF | Ticker | MER | Yield | Holdings | Focus |
|---|
| Vanguard Utilities | VPU | 0.10% | ~3.0% | 65+ | US utilities |
| Utilities Select Sector SPDR | XLU | 0.09% | ~3.0% | 30 | S&P 500 utilities |
| iShares Global Utilities | JXI | 0.43% | ~3.5% | 65+ | Global utilities |
Top Holdings in Canadian Utility ETFs
| Company | Ticker | Weight (XUT) | Business | Dividend Yield |
|---|
| Fortis | FTS | ~18% | Regulated utilities, 50+ yr dividend streak | ~4.0% |
| Emera | EMA | ~12% | Regulated power (NS, Florida) | ~5.5% |
| Hydro One | H | ~15% | Ontario electricity transmission | ~3.0% |
| Canadian Utilities | CU | ~8% | ATCO subsidiary, 52+ yr streak | ~5.0% |
| AltaGas | ALA | ~8% | Natural gas distribution | ~4.0% |
| Algonquin Power | AQN | ~6% | Renewable + regulated utilities | ~5.5% |
| Capital Power | CPX | ~6% | Power generation | ~5.0% |
| Northland Power | NPI | ~5% | Renewable power (wind, solar) | ~5.0% |
| TransAlta Renewables | RNW | ~4% | Renewable power assets | ~6.0% |
Why Utilities Are Considered Defensive
That defensive role is why utilities often sit beside bonds and dividend funds in income portfolios. Compare best bond ETFs in Canada and best dividend ETFs in Canada.
| Characteristic | Detail |
|---|
| Regulated earnings | Revenue set by regulators — predictable cash flows |
| Essential service | Electricity, gas, water demanded in all economic conditions |
| High barriers to entry | Enormous capital requirements, regulatory approvals |
| Stable dividends | Long histories of consistent payments |
| Recession resistant | Utilities outperform during market downturns |
| Bond-like behaviour | Prices correlate with interest rates (lower rates = higher utility prices) |
| ETF | 1-Year | 3-Year (Annualized) | 5-Year (Annualized) | Yield |
|---|
| ZUT | ~12% | ~5% | ~6% | ~4.5% |
| XUT | ~10% | ~4% | ~5% | ~4.0% |
| VPU (USD) | ~15% | ~6% | ~7% | ~3.0% |
Past performance does not guarantee future results.
Utility ETFs vs Individual Utility Stocks
| Factor | Utility ETF | Individual Utility Stocks |
|---|
| Diversification | ✅ 15–65 holdings | ❌ Single company |
| Income stability | Higher (diversified across companies) | Lower (dividend cut risk) |
| MER cost | 0.09–0.65% annually | $0 trading commissions |
| Research required | Minimal | High — must analyze each company |
| Rebalancing | Automatic | Manual |
| Tax efficiency | Eligible dividends from Canadian holdings | Same |
| Best for | Most investors | Those targeting specific yields or companies |
Risks of Utility ETFs
| Risk | Detail |
|---|
| Interest rate sensitivity | Utility stocks fall when rates rise (investors shift to bonds) |
| Sector concentration | 100% in one sector — no diversification |
| Regulatory risk | Rate decisions by regulators can limit growth |
| Slow growth | Utilities grow slowly — expect 3–6% total return annually |
| Canadian utilities are expensive | Often trade at premium valuations |
| Overlap | If you own XIC or XEQT, you already hold 4–5% utilities |
| Renewable transition | Costs of transitioning to clean energy may pressure earnings |
Portfolio Integration
Sample Defensive Portfolio with Utility ETF
| Holding | Allocation | Yield | Role |
|---|
| XEQT (All-equity) | 50% | ~2.5% | Core global equity |
| ZUT (Utilities) | 15% | ~4.5% | Defensive income |
| ZAG (Bonds) | 20% | ~3.5% | Stability |
| XDV (Dividend) | 15% | ~4.0% | Income |
| Blended | 100% | ~3.3% | Balanced income + growth |
If your goal is retirement cash flow rather than a pure defensive tilt, compare these funds with best ETFs for retirement income in Canada.
Tax Considerations
| Account Type | Benefit for Utility ETFs |
|---|
| TFSA | Dividends and growth tax-free — best for Canadian utility ETFs |
| RRSP | Dividends tax-deferred — good for US utility ETFs (no withholding tax) |
| Non-registered | Canadian dividends receive dividend tax credit — favourable tax rate |
| FHSA | Tax-free growth, deductible contributions — suitable for utility ETFs |
For the larger account-choice tradeoff, see TFSA vs RRSP for beginners.