Dull, boring utility shares have in aggregate doubled over the past decade while racier sectors have crashed and burned. But recently, utilities have trailed the broader market rally and some investors now think their income attractions are priced too richly. We beg to differ - there's still value on offer, especially in the energy sector.
In addition to its outperformance, the the sector is also enjoying a 'Goldilocks' macro economic scenario. Steady inflation is supporting price increases, while record low interest rates are easing the cost of servicing debt. None of this is news to investors; shares are once again touching pre-credit crunch highs (see chart).
Utility shares move over more stately five and ten year cycle than the febrile market, because they're driven partly by regulatory conditions. And regulation is the key to the outlook, which is very different for the two constituent parts of the utility sector: water and energy.