3. Utility ETFs are largely on the rise as demand rises

Virtus Reaves Utilities ETF (UTES) gained 34%, FirstTrust NASDAQ CleanEdge Smart Grid Infrastructure ETF (GRID) rose 44%, FirstTrust Utilities AlphaDex Fund (FXU) returned 25.7% with a 2.06% yield, while FXU International (EDI) held 6%.
AI-driven data center power demand grows from 460 TWh in 2024 to 1,000 TWh by 2030, driving utility sector revenue growth of 23.1% in Q3 2025.
An analyst named NVIDIA just named his top 10 AI stocks in 2010. Get it for free here.

Data center electricity consumption will exceed 1,000 TWh by 2030, up from just over 460 TWh in 2024, and will make up 10% of US electricity consumption. Utilities ETFs such as Virtus Reaves Utilities ETF (NYSEARCA:UTES), First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ: GRID)and First Trust Utilities Alpha Dix Fund (NYSEARCA:FXU) Well-positioned to benefit, not only from electricity demand, but from the continued rapid construction of infrastructure to support them all downstream.

These profitable ETFs are no longer synonymous with boredom and retirement income. This is the old story. The new story is that the sector posted revenue growth of 23.1% in Q3 2025, which made it the third fastest growing sector. State Street ended up calling it “a new era of growth.”

Unfortunately, all of this growth has still left investors frustrated who think utility stocks are just missing gains or boring. Thus, many utility ETFs are undervalued.

READ: The analyst named NVIDIA in 2010 Just naming his top 10 AI stocks

Here’s why these three in particular can give you powerful gains.

UTES is one of the most attractive buys if you want solid gains without getting bogged down by losers. This ETF is actively managed, and that’s a positive because the best opportunities in the AI demand supercycle are not evenly distributed across the utilities sector. Active ETFs have management teams that pick stocks for you, and it’s a direct play to what’s called the “power demand supercycle.”

The Virtus Reaves Utilities ETF focuses on AI, EVs, and the renaissance of domestic manufacturing. All of these have strong potential, especially EVs, if oil goes up, interest rates eventually fall, and they become more valuable.

The ETF comes with a modest dividend yield of 1.34% with an expense ratio of 0.49%. UTES’ one-year performance makes up 34% more for this.

GRID does not invest heavily in utilities and instead buys stocks that improve the electrical grid itself. This ETF is benefiting significantly from the construction of the electronic network as the demand for AI increases. This is the “picks and shovels” game in the whole utility demand story.

The GRID ETF is up 44% over the past year. You get a lower dividend yield of 0.92% and an expense ratio of 0.56%, but capital gains remain.

The ETF has historically returned moderate gains, but it has now started to rise over the past few months due to the relentless demand for electricity.

This demand is set to keep rising in the coming years and decades as the broader economy continues to grow. 2020 will be explosive for the sector, so this is a great way to get exposure to it.

I will caution, however, that you’re not getting a pure-play utility stock here. 62% of the stocks are in the industrial sector. I see this as more of a pro than a con because these companies are still leveraged to build networks, and the individual stocks you get from this fund are solid under-the-radar picks.

FXU invests in stocks in the utilities sector and has managed an impressive return of 25.7% in the past year alone. It also has a dividend yield of 2.06%.

The portfolio here is more concentrated but rightly focused on utility stocks. FXU does not rely on a particular sub-sector and holds all utility sector heavyweights. Besides, none of them get much of the pie. FXU simply does not weight the market-cap of large utility companies. Instead, it follows FirstTrust’s Alphadex approach, which selects and weights stocks using growth and value measures to try to identify stocks that may outperform traditional passive indices.

Keep up Edison International (NYSE:EIX) at 4.6%, and the next five stocks all weigh less than 4%. The entire ETF has only 42 holdings.

This has created a very efficient fund where you also get a dividend yield of 2.06%. The downside for me is paying a 0.61% expense ratio, but the yields more than make up for it, and FXU is one of the most competitive names you can pick up today.

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