Even during difficult economic conditions, the demand for essential services such as utilities remains more or less constant. This is why utilities funds are an excellent choice for investors who are seeking a steady income flow through consistent yields from dividends. In fact, investments in this sector are usually considered to be a conservative investment option. Moreover, in the past utilities funds have ventured into emerging markets and provided 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. To view the Zacks Rank and past performance of all utilities funds, investors can click here to see the complete list of funds.
MFS Utilities A (MMUFX) seeks total return. It invests the majority of its assets is securities issued by companies from the utilities sector. It focuses on purchasing equity securities but may also purchase debt instruments. The bulk of the debt securities held are rated investment grade. This utilities mutual fund has a three year annualized return of 13.63%.
The fund manager is Maura A. Shaughnessy and she has managed this utilities mutual fund since 1992.
Fidelity Select Utilities (FSUTX) invests a large share of its assets in utility companies or those deriving a large share of their revenues from operations in this sector. It is non-diversified and may purchase foreign securities. It may also invest a large share of its assets in a single issuer. This utilities mutual fund has a three year annualized return of 14.4%.
As of July 2012, this utilities mutual fund held 28 issues, with 14.95% of its total assets invested in Duke Energy Corporation.
ProFunds Utilities UltraSector (UTPIX) seeks to provide 150% of the daily return of the Dow Jones U.S. Utilities Index by investing in equity securities and derivatives with identical daily returns. The balance of the fund’s assets is utilized to purchase money market securities. The utilities mutual fund has a three year annualized return of 18.69%.
The utilities mutual fund has a minimum initial investment of $15,000 and an expense ratio of 1.54% compared to a category average of 1.28%.
Invesco Utilities Investor (FSTUX) invests the majority 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. The utilities mutual fund has a three year annualized return of 12.71%.
The fund manager is Meggan Walsh and she has managed this utilities mutual fund since 2009.
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. The utilities mutual fund has a three year annualized return of 13.06%.
The utilities mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.84% compared to a category average of 1.28%.
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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