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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Utilities Plus outperformed in Q2 2026 despite rate headwinds, benefiting from small/mid-cap regulated utility strength and data center power demand. The portfolio added to Xcel Energy on valuation."
Miller Howard's Utilities Plus portfolio posted modestly positive performance in Q2 2026, outperforming its negative benchmark despite headwinds from rising interest rates and a rotation away from defensive sectors early in the quarter. The 10-year Treasury yield reached 4.66% in mid-May before declining in June, when utilities recovered ground supported by falling yields and continued data center power demand interest. Small- and mid-cap regulated utilities outperformed as investors rotated toward risk, while independent power producers lagged amid limited incremental data center deals and regulatory uncertainty. The portfolio added to Xcel Energy based on attractive valuation and premium growth profile. Key developments included NextEra's planned acquisition of Dominion Energy in what would be the sector's largest-ever merger, and multiple holdings raising capex guidance. The manager remains constructive on the sector's structural tailwinds, highlighting that aggregate capex guidance for S&P 500 regulated utilities increased 83% from $145B in 2022 to $265B in 2026, with year-over-year growth accelerating from 8% to 23%. This expanding capex is expected to drive earnings growth and support high, growing dividends despite near-term regulatory and rate headwinds.
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