Looking for cover in case the market tanks soon? Don't necessarily flock to the traditional safe haven of utilities stocks, according to CDA/Weisenberger, Rockville, Md.
The firm reports electric utility insiders have shown decreased interest in their own companies' shares. The last time interest was this weak was in mid-1993, the last time the Dow Jones Utility Index peaked.
What's more, utility mutual funds have been anything but conservative investments. Price movements within the group have been erratic, leading to a five-year return average of 3.45%.
Cash flows have been equally volatile. In 1993, when there were 39 utility funds, the sector posted a 17% average return, up nicely from 10.19% the prior year. But the following year, the number of funds increased by more than 50% and the group registered a loss of 8.4%. At that time, industry insiders loaded up on shares and did quite well, since the market returned 23.93% in 1995.