regulated utilities and unregulated power generators— that they believe are poised to capitalize on the data center expansion. The fund launched in 2015, and in most years since then has topped both its Morningstarassigned U. S. utilities fund category and its benchmark S & P 500 Utilities index— sometimes narrowly, and at other times by wide margins. The fund gained a whopping 45.3 % in 2024, followed by 25.5 % in 2025.
Rebello and his partners believe their fund’ s current tilt leaning into the AI boom bodes well for its future performance. The fund is touted as a total return vehicle combining capital appreciation and income. Investors who like utilities primarily for their dividend yield might be put off by the fund’ s relatively meager recent distribution yield of 1.92 %( compare that with the 3.35 % yield on the S & P 500 Utilities index as of December 2025).
But for those investors willing to exchange a smaller yield for greater growth prospects, keep reading.
Industry Focus The Virtus Reaves Utilities ETF is subadvised by Reaves Asset Management, a
Jersey City, N. J.-based firm that launched in 1961. Originally focused on utilities, it today has a small product lineup focusing on the utilities, energy and telecommunications sectors. The“ Virtus” in the product’ s name refers to Virtus Investment Partners, which handles the fund’ s distribution and sales services.
“ There are a little more than 70 publicly traded utilities in the U. S. We’ ve developed a long institutional knowledge about the companies in this industry,” Rhame says.“ A lot of it is just focusing on this sector specifically and trying to get an edge that way.”
Despite its image as a slow-moving sector, the utilities space goes through cycles where this year’ s winners might be next year’ s losers. Reaves posits that the fund’ s active management approach enables it to quickly respond to those changes so that the portfolio can reflect the industry’ s shifting dynamics.
“ If you looked at our fund five or seven years ago, we had a much higher dividend and almost no exposure to power generators,” Rhame explains.“ At the time, the regulated utilities had a much better risk / reward profile.”
Manager: Joseph“ Jay” Rhame III Age: 44
Professional Background: He joined Reaves Asset Management in 2005 and was named CEO in January 2019. Previously, he served as a telecommunications, energy, and utility analyst. He’ s also co-portfolio manager of the Reaves Utility Income Fund and the Virtus Reaves Utilities ETF. In June 2021, he was appointed to serve as president of the Reaves Utility Income Fund.
Outside Interests: He enjoys sailing, and he was a national champion in two classes last autumn.
Manager: Rodney Rebello Age: 34
Professional Background: He joined Reaves Asset Management in 2020. He’ s co-portfolio manager of Virtus Reaves Utilities ETF, and he also serves as an analyst responsible for covering the utility sector. Before joining the firm, he served as a market neutral long / short fundamental research analyst at Millennium Management focusing on electric and gas utilities. He began his career at Citigroup Global Markets where he worked as an energy, utilities, power and renewables sector specialist as well as an event-driven research analyst focused on merger arbitrage, spin-offs and special situations.
Outside Interests: He enjoys the outdoors and plays softball.
Some people wonder whether the fund, with its current high-growth outlook and low dividend, is simply a data center infrastructure fund operating under the guise of a utilities vehicle. The team at Reaves believes that’ s a misrepresentation.
“ Our job isn’ t to have a data center / infrastructure-type fund; it’ s trying to figure out which theme will outperform in whatever market environment we’ re in,” Rhame says.“ So we made the decision during the past few years to make a bigger play on the power generators and regulated utilities with the most upside to capture a lot of the AI-centric data center growth because we saw this huge growth opportunity. And we lessened our positions in the high-yield, slower-growth regulated utilities. We think this growth play could be around for a long time.”
Growing Power Demand
The regulated utilities and unregulated power generators in the Virtus Reaves Utilities ETF offer different risk profiles and levels of cash flow. Regulated utilities have monopoly rights over their service territories. In exchange for that privilege, they are rate-regulated by the states they operate in. They are allowed to charge electricity prices that cover their costs and earn a fixed return while the states make sure the customers don’ t get gouged. These old-school utilities typically generate steady revenue and pay out consistent dividends as a result.
The power generators, by contrast, operate in deregulated markets where energy prices can be volatile. That means their cash flow and earnings can be cyclical. Rebello says the fund’ s portfolio of 18 holdings is currently 60 % to 65 % allotted to traditional utilities while 35 % to 40 % are deregulated power producers.
These holdings reflect what the ETF’ s managers see as the current trends in the U. S. economy. As Rebello describes it, power demand growth had more or less flattened for most of this century until a few years ago. Older power plants— those built for both fossil fuels and nuclear energy— were being retired while intermittent renewables were added to the grid.
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