The Sector Wall Street Calls 'Defensive' Has Quietly Outpaced Both Inflation and the 10-Year Treasury for Almost Two Decades Running

Markets move in cycles, with bullish periods bringing gains and bearish periods triggering panic and a flight to safety into precious metals, bonds, and defensive sectors. Defensive industries supply essential products and services demanded 24/7 with no seasonal decline, including energy, water, food, and medicines. Conservative investors may miss defensive stocks by prioritizing bond income yields, potentially to their detriment. The State Street Utilities Select Sector SPDR ETF (XLU) tracks the S&P 500 Utilities Select Sector Index and focuses on electric, water, and gas utilities, including some renewables. Launched in 1998, it holds 31 stocks and has a 4-star Morningstar rating. It has outperformed the US 10-year Treasury bond and stayed ahead of inflation for 13 of the last 20 years, with expectations to continue into 2026.

"As history has proven, markets go in cycles. There are bullish ascents up and bearish descents down. When they go up, everyone is buoyant because of the paper gains they are making. When the opposite happens, panic follows, and there is the proverbial "flight to safety" towards precious metals, bonds, or "defensive sector" stocks. The "defensive" category features industries which provide essential products and services that are in demand 24/7 and have no season. Some examples are energy, water, food, and medicines."

"When "the flight to safety" rears its head, conservative investors may overlook defensive stocks in favor of the locked in income yield that bonds promise - and that may be to their detriment. There is a defensive ETF that has both outperformed the US 10-year Treasury bond as well as stayed ahead of inflation for 13 of the last 20 years, and will likely include 2026 as well, based on current trends: The State Street Utilities Select Sector SPDR ETF (NYSE: XLU | XLU Price Prediction)."

"Launched on December 16, 1998, XLU was designed to track the S&P 500's Utilities Select Sector Index. Focused on electric, water, and gas utilities, XLU also includes companies involved with renewables as well. It contains 31 different stocks. XLU has a 4-star overall Morningstar rating. Other details include: XLU's top 10 holdings are:"

"In a similar fashion, XLU's "defensive" categorization belies its history of gains. Over the past two decades, It has outpaced both inflation and the US 10"

Read at 24/7 Wall St.