Over the last several months from time to time I have read of certain income oriented investors buying some of the "utilities fund" UTG. I looked at its stats and rolled my eyes. It seemed like the proverbial free lunch. The matter became a more practical one recently, when a dear relative asked me what I thought. The relative thinks the "utilities" descriptor means UTG is safe. The information I see on UTG indicates it is paying around 5.6% dividend yield right now but something like 95% of its holdings are common stock utilities paying well south of 5% dividend yields. The remaining holdings do not look like they would make up the difference to pay the 5.6% dividend and whopping annual 1.7% in fund expenses. UTG is said to be "highly leveraged." The "leverage" part scares me. Can folks here elaborate on what it means for a fund to be highly leveraged? Leveraged means the fund borrows against some collateral, right? Does the fund then use what it borrows buy more shares, short shares, or, well, pay dividends? Are funds like UTG partly hedge funds? I get the feeling high leverage translates to a bit (or a lot) of a Ponzi scheme in this case.