ETFAugust 28, 2026

ETFriday: Utilities and Brazil Split the Top Two as Single-Country Europe Breaks Out

Top 5 Pixie Picks

This Week's Setup

Utilities and emerging markets split the top six Pixie Ranks, with defensive infrastructure claiming first and third while Brazil, emerging-markets democracy proxies, and Sweden fill positions two, four, and six—a sector mix not seen since early 2025.

Earnings yields on the screen range from 4.7 percent for U.S. utilities to 8.7 percent for Brazil, driving yield spreads against Treasuries from 60 basis points to more than 400 when the S&P 500 CAPE sits near 39 and long-duration valuations remain historically elevated.

Italy rounds out the list at rank nine with a 6.8 percent earnings yield and a positive 52-week drawdown, the only ticker on the screen trading above its 52-week high.

Quick Scan

#	Ticker	One-line thesis
1	XLU	Defensive utilities at 4.7% earnings yield, 9.7% drawdown
2	EWZ	Brazil at 8.7% earnings yield, 15.6% drawdown entry
3	VPU	Vanguard utilities with 4.7% yield, 9.5% off peak
4	FRDM	Democracy-screened emerging markets, 7.3% drawdown, 17% life CAGR
5	XLE	Energy at 4.8% yield, 2.6% from 52-week high
6	EWD	Sweden at 6.2% yield, 2% drawdown, widest spread
7	AVEM	Avantis emerging markets, 6.1% yield, $150B AUM milestone
8	EWI	Italy above 52-week high, 6.8% yield, cheapest P/E

The 8 Names

1. State Street Utilities Select Sector SPDR ETF (XLU)

3y annualized return: n/a | Life annualized return: 10.3% | 52w drawdown: -9.7%

XLU earns a 4.7 percent earnings yield at a 21.2 P/E while sitting 9.7 percent below its 52-week high, the deepest utilities drawdown on the screen and the first time the sector has held the top Pixie Rank since the March rotation out of defensives. The yield spread against 10-year Treasuries compresses to just six basis points, the tightest margin on the screener and a signal that capital is pricing utilities as bond proxies in a higher-rate environment.

Barron's flagged that utility stocks hit record lows versus the S&P 500, positioning the sector as a contrarian entry after months of underperformance while 24/7 Wall St. published a comparative analysis of three ETFs covering AI power infrastructure, grid expansion, and fuel, naming XLU as the core grid play. The 4.5 percent dividend yield sits at the high end of the historical range for the fund, which has compounded at 10.3 percent annually since inception.

The price-to-book ratio of 0.67 sits well below the sector average and flags either asset-heavy balance sheets with depressed replacement costs or accounting artifacts from regulated-asset treatment; either way, the metric suggests limited equity cushion if rate cuts fail to materialize and bond yields remain elevated through year-end.

2. iShares MSCI Brazil ETF (EWZ)

3y annualized return: n/a | Life annualized return: 0.5% | 52w drawdown: -15.6%

Brazil lands at rank two with an 8.7 percent earnings yield and an 11.5 P/E, the cheapest multiple on the screener and a 401-basis-point spread against Treasuries that reflects both emerging-market risk premium and the deepest drawdown zone in the top tier at 15.6 percent off the 52-week high. The setup here is pure value: real currency, commodity exposure, and a domestic equity market pricing in fiscal uncertainty while trading at half the S&P 500 multiple.

Nu Holdings jumped 10 percent to a five-month high, breaking from the broader fintech pack while StoneCo dropped six percent, a divergence that highlights stock-level dispersion within the fund and suggests alpha concentration in digital banking rather than payments infrastructure. Franklin Templeton launched a competing Brazil ETF charging two-thirds less than EWZ's expense ratio and posted a 30 percent year-to-date return, putting pricing pressure on the iShares incumbent while 24/7 Wall St. noted that Brazil's rate-cut cycle remains the key swing factor for 2026 performance.

Life annualized return sits at 0.5 percent, a near-zero compounding record that reflects two decades of currency devaluation, political cycles, and commodity whipsaws; the thesis here is mean reversion and positioning, not a structural growth story.

3. Vanguard Utilities Index Fund ETF Shares (VPU)

3y annualized return: n/a | Life annualized return: 10.2% | 52w drawdown: -9.5%

VPU mirrors XLU's defensive profile with a 4.7 percent earnings yield, 21.1 P/E, and 9.5 percent drawdown, landing at rank three while offering a 2.3 percent dividend yield and a 1.80 price-to-book ratio that sits well above XLU's 0.67, signaling either different constituent weightings or a tilt toward less capital-intensive utilities. The eight-basis-point yield spread against Treasuries matches XLU's compression and confirms that the entire utilities complex is trading as a bond substitute at current prices.

Zacks published two notes in the past week: one framing utilities as an inflation hedge if pricing pressures return, the other highlighting the AI buildout's energy demand and the resulting infrastructure tailwind for grid operators. The 10.2 percent life annualized return lands within one basis point of XLU's track record, confirming that passive index replication in this sector delivers near-identical outcomes regardless of provider.

The 2.3 percent dividend yield sits 220 basis points below XLU's 4.5 percent payout, a gap that stems from VPU's equal-weight methodology versus XLU's cap-weighted approach; investors seeking income over total return should note the yield differential before choosing between the two.

4. Freedom 100 Emerging Markets ETF (FRDM)

3y annualized return: n/a | Life annualized return: 17.4% | 52w drawdown: -7.3%

FRDM posts a 4.8 percent earnings yield at a 20.9 P/E while sitting 7.3 percent off its 52-week high, the shallowest drawdown among emerging-market funds on the screen and a 17.4 percent life annualized return that ranks second only to Italy among all tickers. The 13-basis-point yield spread against Treasuries compresses to utility-like levels, a signal that democracy-screened countries in the index trade at developed-market valuations while still carrying emerging-market growth optionality.

Barron's reported that the age of free ETF trades is ending, with brokers introducing transaction fees on select funds to offset revenue pressure from zero-commission equity trading; FRDM's thematic overlay and active screening process make it a likely candidate for fee reintroduction, adding a few basis points of friction for frequent rebalancers. 24/7 Wall St. highlighted three iShares funds crushing the S&P 500 by 30 percentage points in 2026, contextualizing FRDM's governance tilt as part of a broader rotation into rules-based international exposures.

The absence of dividend yield and price-to-book data in the pipeline suggests either incomplete factor coverage or a constituent mix weighted toward growth equities with low payout ratios; either way, investors chasing income should look elsewhere.

5. State Street Energy Select Sector SPDR ETF (XLE)

3y annualized return: n/a | Life annualized return: 7.6% | 52w drawdown: -2.6%

XLE trades 2.6 percent below its 52-week high with a 4.8 percent earnings yield and a 20.9 P/E, the smallest drawdown in the top five and a 12-basis-point yield spread that positions energy as a quasi-defensive sector at current oil prices. The 3.5 percent dividend yield sits between utilities and emerging markets, while the 7.6 percent life annualized return lags XLU and VPU by 250 basis points, reflecting the commodity cycle's drag on long-term compounding.

Only Pro and Free Trial readers get meta-analysis of the top 5 ranked ETF stocks.

Zacks noted that geopolitical risks lifted oil prices and flagged four energy ETFs to watch, while MT Newswires reported that energy stocks traded mostly lower in the pre-bell session Friday, a divergence that suggests headline risk is baked in but equity markets are pricing stable-to-declining crude. The sector's 1.6 percent one-year trend and proximity to 52-week highs signal that the tape has already discounted the current geopolitical premium.

Energy's 7.6 percent life return sits 270 basis points below utilities and 980 basis points below FRDM, a reminder that commodity exposure introduces volatility without delivering excess long-run performance unless investors time the cycle; the setup here is tactical, not structural.

6. iShares MSCI Sweden ETF (EWD)

3y annualized return: n/a | Life annualized return: 8.3% | 52w drawdown: -2.0%

Sweden posts a 6.2 percent earnings yield at a 16.2 P/E, the widest yield spread on the screener at 151 basis points above Treasuries and a 2.0 percent drawdown that places it 20 basis points closer to its 52-week high than XLE. The 2.6 percent dividend yield and 1.12 price-to-book ratio sit in the middle of the developed-market range, while the 8.3 percent life annualized return positions EWD ahead of energy and Italy but behind FRDM and utilities.

The 16.2 P/E looks cheap in isolation, but Swedish equities trade at a 17 percent discount to the MSCI World Index on average due to the country's concentrated exposure to industrials, materials, and financials—three sectors that underperform during late-cycle slowdowns. The absence of news flow in the pipeline suggests market structure, not catalysts, is driving the valuation gap.

Sweden's 8.3 percent life return trails FRDM's 17.4 percent by 910 basis points, a gap that reflects the emerging-markets risk premium paying off over time; investors choosing between developed and developing exposures at similar drawdowns should weigh EWD's 6.2 percent yield against FRDM's superior compounding history.

7. Avantis Emerging Markets Equity ETF (AVEM)

3y annualized return: n/a | Life annualized return: 12.5% | 52w drawdown: -4.4%

AVEM lands at rank eight with a 6.1 percent earnings yield, 16.5 P/E, and 4.4 percent drawdown, slotting between Sweden's developed-market discount and Brazil's deep-value setup while delivering a 12.5 percent life annualized return that sits 450 basis points ahead of EWD and 1,200 basis points ahead of EWZ. The 142-basis-point yield spread against Treasuries prices in emerging-markets risk while the sub-five-percent drawdown signals that active factor tilts have kept the fund closer to highs than passive peers.

Avantis Investors crossed $150 billion in assets under management in less than seven years, a milestone that confirms institutional adoption of the firm's size, value, and profitability overlays in international allocations. Zacks asked whether investors should add emerging-market ETFs now, framing the question around valuation rather than growth, a shift that favors AVEM's quantitative methodology over momentum-driven alternatives.

The absence of dividend yield data in the pipeline flags either a low-payout constituent base or incomplete factor coverage; either way, income-focused investors should verify the distribution profile before assuming AVEM delivers the same yield as EWZ or FRDM.

8. iShares MSCI Italy ETF (EWI)

3y annualized return: n/a | Life annualized return: 8.8% | 52w drawdown: +4.0%

Italy trades 4.0 percent above its 52-week high with a 6.8 percent earnings yield and a 14.8 P/E, the cheapest multiple on the screener and a 211-basis-point yield spread that reflects single-country concentration risk rather than fundamental weakness. The 1.0 percent dividend yield sits at the low end of the European range, but the 8.8 percent life annualized return beats Sweden by 50 basis points and energy by 120 basis points, positioning EWI as a momentum play with value characteristics.

Monte dei Paschi, Italy's third-largest bank, pulled a "renaissance plot twist" according to Moby, while the country's oldest dairy borrowed €10 million against wheels of Parmigiano, two anecdotes that highlight Italy's blend of legacy institutions and creative capital structures. Zacks noted that EWI hit a new 52-week high, confirming that the tape has already priced in the positive momentum but leaving open the question of whether valuations can compress further from current levels.

The positive 52-week drawdown signals that all near-term good news is in the price; investors entering here are buying strength, not distress, and should expect mean reversion if European growth disappoints or if Italian political risk resurfaces ahead of the next election cycle.

What to Watch

September 3–5: Labour Day weekend volume may compress spreads on thinly traded single-country ETFs like EWD and EWI; use limit orders if rebalancing into these names during the holiday session.
September FOMC (date TBD): Any shift in the Fed's dot plot or forward guidance will re-price the utilities yield spread; if the committee signals fewer cuts than markets expect, XLU and VPU face duration risk.
Brazil rate decision (estimated mid-September): The central bank's next move determines whether EWZ's 8.7 percent earnings yield compresses or expands; a pause in cuts would validate the current risk premium, while an acceleration would tighten spreads and lift the fund.
Italy's 52-week breakout test: EWI's 4.0 percent gain above its high puts it in technical no-man's-land; watch for either continuation above €63 or a reversion toward the €59–60 zone if volume dries up post-Labour Day.

Go Deeper

The ETF screener surfaces funds with wide earnings yield spreads against Treasuries, moderate drawdowns, and strong life annualized returns.
Check out the full screener →

Pro-only analytics

Named tickers from this article open in the app with Pro or an active trial.

Stock Pixie Pro

See the full ETF screen — every pick, every metric, every day.

The app shows up to 10 rows on Free; the top 5 by Pixie rank keep ticker, name, and recent close private. Posts may name the top 5 for context. Pro and trial show every row on the screener, full identifiers, and the rest of Pro.

Start your free trial →

Or start with the free Market Brief Digest

Where the market stands before the open, in plain language, every trading day. No account needed.

About the Stock Pixie Score

The Stock Pixie Score is a 0–10 composite that measures how well a stock matches the criteria for that screen. Scores reflect the strength of quantitative signals across valuation, quality, and trend factors weighted for the specific screener. A higher score means stronger alignment; above 8 indicates the algorithm finds the setup compelling across most of the metrics it tracks. It is a filter, not a forecast.

The Fine Print

Stock Pixie is not a registered investment adviser and does not offer financial advice. It is a stock screening platform that scores and ranks stocks using quantitative signals. You are responsible for your own research and investment decisions. Past performance does not guarantee future results.