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MFS Utilities: Not Your Average Utility Fund

Ryan Ermey, Senior Reporter, Kiplinger's Personal Finance
This fund's veteran manager also invests in cable stocks and energy partnerships.

Maura Shaughnessy has seen plenty of ups and downs during her quarter-century tenure at the helm of MFS Utilities (symbol MMUFX). Now, after a few years of so-so results, her fund is again among the leaders in its group.

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Shaughnessy invests mostly in bargain-priced electricity, natural gas and water utilities, holding a mix of high-yielding stocks and stocks that pay less but, she expects, will deliver robust share-price gains. She also holds firms that tend to be underrepresented in utilities funds. MFS has nearly 20% of its assets in energy stocks--mostly master limited partnerships--and 15% in cable-TV operators, such as Comcast, and telecommunications companies.

Shaughnessy is far more willing than her rivals to go abroad. At last word, her fund had 30% of its assets in foreign stocks, compared with 11% for the average utility fund. That has hurt MFS's performance because U.S. stocks have done far better than foreign issues in recent years. But as a result, Shaughnessy says, she has never seen foreign utilities so cheap relative to their U.S. counterparts.

MFS Utilities has rewarded patient investors. It has been the top-performing utilities fund over the past 25 years, with a 10.9% annualized return. The fund's Class A shares, which yield 2.8%, normally levy a 5.75% sales charge, but you can buy them without a load at several online brokers.

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Copyright 2017 The Kiplinger Washington Editors