Top 5 Energy Mutual Funds (June 2011)

With every passing year, the world’s appetite for energy continues to increase steadily. Governments and corporations alike are constantly on the lookout for new energy sources or more efficient technology. For fast growing economies such as China and India, the situation is even more acute. Prices of these scarce resources are surging and investors could benefit from the situation by investing in this sector. Energy mutual funds are a superior option for forays into the industry as they reduce risks involved by holding widely diversified portfolios.

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

BlackRock Energy & Resources (SSGRX) invests the majority of its assets in energy and natural resources firms worldwide. It also invests in companies in related sectors as well as in utilities. This energy mutual fund returned 47.55% over the last one year period.

The energy mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.27% compared to a category average of 1.65%.

Fidelity Select Natural Resources (FNARX) seeks capital growth. The fund invests a large proportion of its assets in firms whose primary operations involve owning or developing natural resources or acting as vendors to companies form this sector. It is non-diversified and may purchase foreign securities. This energy mutual has a five year annualized return of 8.71%.

The fund manager is John Dowd and he has managed this energy fund since 2006.

Ivy Global Natural Resources A (IGNAX) invests the majority of its assets in equity securities of companies, whose primary operations are related to natural resources, including suppliers and service providers. The fund seeks international diversification by investing in foreign firms or in domestic companies with large foreign operations. The energy mutual fund returned 45.13% over the last one year period.

The energy mutual fund has a minimum initial investment of $500 and an expense ratio of 1.39% compared to a category average of 1.52%.

Rydex Energy (RYEIX) seeks to provide investors long-term capital growth. The fund invests heavily in equity securities and derivatives of energy companies which are traded in the U.S. This includes companies which provide products and services to the energy sector. This energy mutual has a ten year annualized return of 9.66%.

As of May 2011, this energy mutual fund held 93 issues, with 6.25% of its total assets invested in ExxonMobil Corporation.

Vanguard Energy (VGENX) utilizes the majority of its assets to purchase common stocks of companies whose primary activities are energy related, including energy conservation and pollution control. The fund may invest all of its assets in foreign equity securities. The energy mutual fund returned 40.45% over the last one year period.

The fund manager is Karl E. Bandtel and he has managed this energy fund since 2002.

To view the Zacks Rank and past performance of all energy 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/mutualfunds.

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