Utilities ETFs: The AI Power Demand Opportunity
As AI accelerates data centre expansion, utilities are shifting from defensive income plays to potential growth beneficiaries powered by rising electricity demand.
The recent rotation away from the information technology sector into areas of the economy considered less vulnerable to disruption (HALO: Hard/Heavy Assets, Low Obsolescence) is motivated by investors' desire for resilience amid growing uncertainty. With enthusiasm surrounding artificial intelligence serving as a catalyst for recent market gains, investors and market observers are now looking beyond the hype of AI innovation and instead questioning its increasing costs and the uncertain future this technology may bring.
Although the true outcomes of AI development remain uncertain, some sectors are benefiting from the investments being made, especially the Utilities sector.
The Evolving Value Proposition of Utilities
Utility companies provide essential services in our modern society, such as electricity, natural gas, and water. Since people depend on these services in any economy, demand and revenue tend to remain stable for utility companies, and as such, many operate under regulated or contracted pricing, which ensures predictable earnings and often above-average dividends. However, the growth of AI development and its related energy requirements have increased the investment appeal of utility companies – transforming them from steady-income sources into entry points for AI growth.
Central to AI development are data centres, secure physical facilities that house an organization's IT infrastructure, including networked computers (servers), storage systems, and specialized equipment for processing, storing, and distributing large volumes of data. Data centre development has significantly increased in recent years, with a recent Jones Lang LaSalle report stating that the global data centre sector will likely expand at a 14% CAGR through 2030, requiring energy innovations to alleviate grid constraints.
While many hyperscale firms are pursuing ‘energy independence’ initiatives, utilities will remain the backbone of power supply but must adapt to new demands and sustainability standards. This involves grid modernization to accommodate increasing data centre loads, navigating procedural steps that enable innovative power solutions, and using data-driven decision-making to optimize power distribution and infrastructure investments. Implementing grid-enhancing technologies within existing utilities will help maximize electricity transmission, strengthen grid stability, and create new revenue streams for utility operators.
Investing in Utilities
Utilities have long been considered a defensive sector; however, with the proliferation of AI and the investments being made in data center development, it is poised to experience growth going forward. For Canadian investors interested in gaining turnkey exposure to the utilities sector, the following ETFs are worth considering.
The Harvest Equal Weight Global Utilities Income ETF (Ticker: HUTL), which invests in an equally weighted portfolio of 30 global utilities companies, covering utilities, telecommunications, oil & gas storage, and transportation. The ETF aims to provide consistent and competitive monthly income with potential for growth. To generate an enhanced monthly distribution yield, an active covered call strategy is employed.
Harvest has an enhanced version of the fund, Harvest Equal Weight Global Utilities Enhanced Income ETF (Ticker: HUTE), which utilizes approximately 25% leverage to enhance monthly cash flow and growth prospects.
For solutions with a North American focus, the Hamilton Utilities Yield Maximizer ETF (Ticker: UMAX) is designed to deliver attractive monthly income while providing exposure to a portfolio of utility services equity securities, primarily domiciled/listed in Canada and the U.S. Additionally, Hamilton has an enhanced version of the fund, the Hamilton Enhanced Utilities ETF (Ticker: HUTS), which utilizes approximately 25% leverage to enhance yield and return potential.
Further to the above, Hamilton recently expanded its product line-up, launching the Hamilton Enhanced Utilities ETF (Ticker: UMVP) earlier this year, which tracks the Solactive Canadian Utility Services High Dividend Index GTR, reflecting an equal-weight portfolio of blue-chip Canadian utilities, pipelines, and telecom companies.
This article was written on March 10th, 2026. Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
