Top 5 Utlity Mutual Funds (June 2011)

During difficult economic conditions, the demand for essential services such as utilities remains more or less constant. Since this category of funds protects investments during a downturn, they are viewed as a defensive choice, and have gained strength in current market conditions. They are also an excellent choice for investors seeking a steady income flow from consistent dividends yields. Investments in this sector are usually considered to be a conservative investment option. However, many utilities funds are now venturing into emerging markets and provide appreciably higher returns at relatively lower levels of risk..

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.

Fidelity Advisor Utilities A (FUGAX) seeks capital growth. The fund invests the majority of its assets in public utility companies as well as those firms which derive a large share of revenues from related operations. The utilities mutual fund returned 18.13% over the last one year period and has a ten year annualized return of 3.61%.

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

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 5.05%.

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 1.40%.

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 16.2% over the last one year period.

As of April 2011, this utilities mutual fund held 72 issues, with 3.23% of its total assets invested in Southern Company.

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 15.21% over the last one year period.

The utilities mutual fund has an expense ratio of 0.24% compared to a category average of 1.40%.

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

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund.

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