Just been digging into sector performance data and something caught my eye. Seven of Vanguard's 11 sector ETFs are actually crushing the S&P 500 so far this year, which is pretty wild considering how tech-heavy the broad market is.

What's interesting is that a lot of the sectors that struggled in 2025 are now leading the charge in 2026. Energy, materials, consumer staples, and utilities are all up double digits. Real estate and healthcare are outperforming too. The rotation is real.

But here's what really stands out to me - the utility sector specifically. I know utilities get a reputation as boring defensive plays, but there's actually a pretty compelling case building right now. The U.S. is experiencing genuine electricity demand growth, and I'm talking about the strongest four-year growth projection since 2000 when you factor in 2024 and 2025 numbers plus the forecasted 1% increase in 2026 and 3% in 2027. That's mostly coming from AI and data center expansion, which isn't going away anytime soon.

Normally utilities underperform the broader market because they don't capture economic growth the same way tech or industrials do. But right now, the math is different. You've got regulated utilities with steady cash flows, most paying stable and growing dividends, and they're positioned to actually benefit from this electricity boom.

The tricky part with utilities is that they're regional. Duke Energy operates mainly in the Carolinas and Southeast, while Southern Company has a completely different footprint. It's not like tech where you can just pick Nvidia over Apple. That's actually why best utilities etfs make sense here - you get exposure across the whole sector without betting on one region.

Vanguard Utilities ETF (VPU) is probably the cleanest play if you want to go this route. The expense ratio is only 0.09%, you get 67 stocks in one ticker, and even after the big moves in 2024 and 2025, it's still reasonably valued. The P/E is sitting at 22.9 with a 2.7% yield, compared to the S&P 500 ETF at 27.7 P/E and 1.1% yield. That's a meaningful difference if you're looking for income.

I'm not saying best utilities etfs are going to outperform forever, but the sector setup looks genuinely interesting right now. Whether you want to build a full utility position or just add some diversification with income, this is worth looking at in April. The regulatory environment is still restrictive so growth won't be explosive, but the electricity demand tailwind is real and it's going to take years to play out.