As the global appetite for energy continues to increase rapidly, governments and corporations alike are devoting greater resources for the discovery of new energy sources as well as the development of more efficient technology in this domain. In fact, newer economic powerhouses such as China are discovering that the going is even tougher for them. Prices of these invaluable resources continue to rise at a steady rate and the energy sector is clearly a lucrative investment option. 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. To view the Zacks Rank and past performance of all energy funds, investors can click here to see the complete list of funds.
ING Global Natural Resources A (LEXMX) invests heavily in equity securities of domestic or foreign companies related to the natural resources industry. A maximum of 50% of its assets may be invested in any single industry related to natural resources. This energy mutual fund has a five year annualized return of 11.12%. The fund has an expense ratio of 1.55% as compared to category average of 1.52%.
Fidelity Select Natural Resources (FNARX) invests a large share of its assets in companies whose principal operations are related to natural resources or providing services to companies from the sector. The fund focuses on acquiring common stock and also invests in specific precious metals. This energy mutual fund has a five year annualized return of 14.61%.
John Dowd is the fund manager and has managed this fund since 2006.
Invesco Energy Investor (FSTEX) seeks capital appreciation over the long term. The fund invests a lion’s share in companies related to the energy industry. It may also invest in derivatives or instruments whose economic nature is similar to these energy companies. This energy mutual fund has a five year annualized return of 12.62%.
As of December 2013, this fund held 40 issues with 5.28% of its assets invested in Chevron Corp.
Rydex Series Trust Energy Services (RYVIX) seeks capital growth. It invests the majority of its assets in equity securities traded in U.S. markets and derivatives from the energy services sector. The fund focuses on investing in small and mid-cap companies from the sector. This energy mutual fund has a five year annualized return of 16.98%.
The fund has an expense ratio of 1.35% as compared to category average of 1.64%.
Franklin Natural Resources A (FRNRX) seeks high return. The fund invests most of its assets in equity and debt securities of those companies whose primary operations relate to natural resources. The company may invest a small portion in equity and debt securities issued by foreign companies with market cap not more than $1.5 billion. This energy mutual fund has a five year annualized return of 12.15%.
As of December 2013, this fund held 103 issues with 4.58% of its assets invested in Schlumberger NV.
To view the Zacks Rank and past performance of all energy mutual funds, investors click here to see the complete list of funds.
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Read the analyst report on LEXMX
Read the analyst report on FNARX
Read the analyst report on FSTEX
Read the analyst report on RYVIX
Read the analyst report on FRNRX
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