XLU, the Utilities Select Sector SPDR, heads into the first week of June carrying its largest short position in over a month — and the direction of travel is accelerating in one clear direction.
Short interest has climbed 25% in the past month to reach 12.7% of the free float, with a 15% jump in the most recent week alone. That kind of velocity in a defensive sector ETF is worth pausing on. XLU is a fund that typically attracts income-seekers and hedgers; a short base this large and this fast-growing tells a different story about how some market participants are positioning around the utilities trade right now.
The borrow market adds important texture to that setup. Availability has loosened sharply — from a near-fully-used 5.4% in late May to 33.6% as of June 2, the highest it has been since early May. That loosening is significant. When availability compressed below 10% through the final week of May, new short positions were genuinely difficult to open. The easing since then means fresh shorts can now enter the trade with relative ease, and the cost to borrow — already low at 0.59% — provides no meaningful deterrent. Options positioning reinforces the bearish lean: the put/call ratio sits at 2.55, just under two standard deviations below its 20-day average of 2.67, which for this ETF — structurally put-heavy — means options traders have been trimming protective hedges, not adding them. That divergence from the dominant short-building trend is worth watching.
The macro backdrop explains much of the short interest surge. XLU has dropped 5.7% over the past month and 3.2% in the past week, closing at $43.90 on June 2. Utilities underperform when bond yields rise or when risk appetite rotates back toward growth assets — and the past month has offered plenty of both. The ORTEX short score of 57.4 sits in modestly elevated territory, having nudged higher over the past week as short interest grew, but it is not yet at extremes that would flag an imminent squeeze. The score made a notable step-change around May 26, jumping from the mid-55s to the high-57s — the same window in which short interest jumped most sharply, from roughly 27 million shares to over 31 million.
Institutional ownership is broadly distributed, with no single holder above 5%. Morgan Stanley and JPMorgan are the largest disclosed holders at 4.8% and 4.6% respectively, both of which added to positions in Q1. UBS Asset Management made the most aggressive add — nearly 9 million shares in the quarter — while Managed Account Advisors trimmed by 1.6 million. The holder base is dominated by broker-dealers and wealth-management platforms, consistent with a fund used primarily for tactical allocation and hedging rather than concentrated conviction.
Analyst data on XLU is too stale to cite. With dividend history suggesting a quarterly payout last recorded at $0.31 per share in early 2026, the fund's income case remains intact — but that yield alone has not been enough to offset the price pressure from rising rates eating into the relative attractiveness of utility dividends.
The next signal to watch is whether availability continues to loosen or reverses — a return toward the sub-10% levels seen in late May would suggest fresh demand for borrows is overwhelming supply again, a potential prelude to renewed pressure on the price.
See the live data behind this article on ORTEX.
Open XLU on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
