Top 5 Energy Mutual Funds (July 2011)

By Jul 12, 2011, 10:59 AM Author's Blog  

Rising energy prices are making a serious dent on household budgets, adding to the pain of high inflation and higher utilities bills. The clear gainers in this scenario are energy companies and stocks of major players like Chevron and BP have been continuously trending upward. Investing in these securities would seem to be the most logical thing to do, but for the fact that the sector often witnesses high levels of volatility. One reason for this is that a large portion of the world’s oil reserves are located in relatively unstable nations. By holding widely diversified portfolios, mutual funds can greatly reduce the risks associated with investing in this sector.

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

Fidelity Select Energy (FSENX) seeks capital growth. It invests the majority of its assets in equity securities of companies whose principal operations are related to the energy sector. The fund may purchase foreign securities. The energy mutual fund returned 51.2% over the last one year period.

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

Vanguard Energy Index (VENAX) invests in approximately all of the equity securities which make up its target index, the MSCI US Investable Market Energy 25/50 Index. This index is made of large, medium and small domestic companies from the energy sector. The energy mutual fund has a five year annualized return of 8.42%.

The energy mutual fund has an expense ratio of 0.24% compared to a category average of 1.65%.

Rydex Energy (RYEIX) seeks to provide investors long-term capital growth. It invests heavily in equity securities and derivatives of energy companies which are traded in the U.S. This energy mutual fund returned 44% over the last one year period.

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

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 energy mutual fund has a ten year annualized return of 14.03%.

The fund manager is Fred Sturm and he has managed this energy mutual fund since 1997.

ProFunds UltraSector Oil & Gas Investor (ENPIX) seeks to return daily investment results which are one and a half times the daily performance of the Dow Jones U.S. Oil & Gas Index. The fund primarily purchases equity securities and derivatives whose daily returns correspond to its investment objectives. The energy mutual fund returned 70.64% over the last one year period.

The energy mutual fund has a minimum initial investment of $15,000 and an expense ratio of 1.69% compared to a category average of 1.65%.

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.

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