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By Jeremy Glaser | 11-19-2009 11:54 AM

Our Pick in Utilities ETFs

Morningstar ETF strategist Paul Justice says the utilities sector deserved its recent nod from PIMCO's Bill Gross.

Jeremy Glaser: I'm Jeremy Glaser with Morningstar.com.

PIMCO's Bill Gross recently wrote that as more industries get regulated by the government and act like utilities, investors might just want to buy utilities themselves instead of dealing with the zero percent interest rate that they've been getting on money market funds.

Here to discuss this with me is ETF strategist Paul Justice. Paul, thanks for joining me.

Paul Justice: A pleasure to be here.

Glaser: So do you agree with Bill that it makes sense for investors to be looking at utility stocks right now?

Justice: Yes, I think Bill made a cynical point when he was saying "as industries get more regulated," but I think there are other great reasons to buy utilities that he also pointed out.

It's true with a money market fund, you're getting a near-zero yield, and it's going to take you centuries to double your money if you're in these funds. And while that might be good for capital preservation, it's not very good for real returns over the life of a normal human being.

I think that he points out an interesting statistic. The dividend yield of utilities is very high right now, not only relative to other sectors but also in a historical context and when you're comparing it to corporate bonds or something like that.

So we've been looking at utilities in our ETF Investor newsletter, and we find it to be a very compelling investment just from a value perspective.

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