Top 5 Utilities Mutual Funds (May 2011)

On Tuesday, market indices moved higher with utilities and other defensive sectors emerging as the primary gainers. Generally considered to be a sector with low growth prospects, utilities stocks have increased by 5.4% since April this year which also marked the beginning of the recent decline in yields on US bonds. This sector was also expected to feel the impact of rising interest rates, but has continued to buck the trend and has outperformed the market as a whole. Insight gleaned from in-depth research and widely diversified portfolios make mutual funds the best option to invest in the utilities sector.

Below we will share with you 5 top rated utilities mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future.

Rydex Utilities (RYAUX) seeks capital appreciation. The fund invests the majority of its assets in utilities companies whose securities are traded in the US. It focuses on purchasing equity securities and may also invest in derivatives. This utilities mutual fund returned 15.43% over the last one year period.

The utilities mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.88% compared to a category average of 1.41%.

Franklin Utilities A (FKUTX) concentrates on purchasing equity in public utilities companies. More than 25% of its assets are invested in companies that provide electricity, gas, water and communication services. The utilities mutual fund has a ten year annualized return of 6.54%.

John Kohli is the fund manager has managed this utilities mutual fund since 1998.

Vanguard Utilities Index Admiral Shares (VUIAX) seeks to track the performance of the MSCI U.S. Investable Market Utilities Index. This is index consists of companies in the utilities sector regardless of their market capitalization. This utilities mutual fund returned 14.26% over the last one year period.

As of December 2010, this utilities mutual fund held 87 issues, with 6.64% of its total assets invested in Southern Company.

Invesco Utilities Investor (FSTUX) invests a large share of its assets in stocks of companies in the utilities sector or related industries. Firms engaged in the production and distribution of gas and electricity as well as those providing telecom services constitutes its major investments. Up to 25% of the fund’s assets may be used to purchase foreign securities. The utilities mutual fund has a five year annualized return of 4.55%.

The utilities mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.49% compared to a category average of 1.41%.

Fidelity Advisor Utilities A (FUGAX) seeks capital growth. The fund invests the majority of its assets in public utility companies as well as firms deriving a large share of revenues from related operations. The utilities mutual fund returned 17.68% over the last one year period and has a ten year annualized return of 3.87%.

Douglas Simmons is the fund manager has managed this utilities mutual fund since 2006.

To view the Zacks Rank and past performance of all utilities mutual funds, then click here.

About Zacks Investment Research 1767 Articles

Zacks Investment Research is one of the most highly regarded firms in the investment industry. In 1978 Zacks originated the concept of utilizing earnings estimates revisions to make profitable investment decisions. Zacks offers multiple investment products and services to help investors achieve superior returns.

Visit: Zacks.com

Be the first to comment

Leave a Reply

Your email address will not be published.


*