3 Utility ETFs With Massive Upside as Demand Keeps Soaring

Data center electricity consumption is on pace to exceed 1,000 terawatt-hours by 2030, up from just 460 TWh in 2024, and it will comprise 10% of the U.S.’ power consumption. Utilities ETFs like Virtus Reaves Utilities ETF (NYSEARCA:UTES), First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ:GRID), and First Trust Utilities AlphaDEX Fund (NYSEARCA:FXU) are well positioned to benefit, not just from electricity demand, but all the downstream effects from an ongoing rapid buildout of infrastructure to support them.

These utility ETFs are no longer synonymous with boredom and retiree income. That’s the old story. The new story is that the sector posted earnings growth of 23.1% in Q3 2025, which made it the third fastest-growing sector. State Street ended up calling this “ a new era of growth“.

Unfortunately, all this growth has still slipped past investors who think utility stocks are just making up lost gains or are boring. Thus, most utilities ETFs remain undervalued.

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

Virtus Reaves Utilities ETF (UTES)

UTES is one of the most compelling buys if you want strong gains without being bogged down by losers. This ETF is actively managed, and this is a positive because the best opportunities in the AI demand supercycle are not evenly distributed across the utility sector. Active ETFs have management teams picking stocks for you, and this one is a direct play on what it calls a “power demand supercycle”.

The Virtus Reaves Utilities ETF focuses on AI, EVs, and domestic manufacturing reshoring. All of them have solid potential, especially EVs, if oil keeps going up, interest rates eventually come down, and make them more worthwhile.

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

First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID)

GRID does not invest in utilities broadly and instead buys stocks that upgrade the electrical grid itself. This ETF benefits significantly from the buildout of the electrical grid as AI demand keeps climbing. It’s a “picks and shovels” play on the entire utility demand story.

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

The ETF historically returned mediocre gains, but it has now started booming in the past few months due to the relentless demand for electricity.

That demand is set to keep climbing in the coming years and decades as the broader economy grows. The 2020s will be explosive for the sector, so this is a great way to get exposure to it.

I would warn, however, that you don’t get pure-play utility stocks here. 62% of stocks are in the Industrials sector. I see it more as a pro than a con since these companies are still beneficiaries of the grid buildout, and the individual stocks you get from this one fund are strong under-the-radar picks.

First Trust Utilities AlphaDEX Fund (FXU)

FXU invests in stocks in the utilities sector and has managed to deliver stellar returns of 25.7% in just the past year. That too, alongside a dividend yield of 2.06%.

The portfolio here is more concentrated but focuses on the right kind of utilities stocks. FXU does not lean into one specific sub-sector and grabs the heavyweights of the entire utilities sector. Moreover, none of them gets too much of the pie. FXU does not simply market-cap-weight the biggest utility companies. Instead, it follows First Trust’s AlphaDEX approach, which selects and weights holdings using growth and value measures in an effort to identify stocks that may outperform more traditional passive indexes.

The top holding is Edison International (NYSE:EIX) at 4.6%, and the subsequent five holdings all have weightings a little above 4%. The whole ETF has just 42 holdings.

This has created a rather impressive fund where you also get a 2.06% dividend yield. The drawback for me is paying that 0.61% expense ratio, but the yield more than makes up for it, and FXU remains one of the most competitive names you can snap up today.