Utilities funds are an excellent choice for investors seeking a steady income flow. They are also used as defensive instruments, which protect investments during a market downturn. This is because the demand for essential services such as those provided by utilities remains unchanged even during difficult times. In recent years, many funds in this category have increased their exposure to emerging markets and unregulated companies. This has increased the risk involved but has also generated higher returns.
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 14.13%.
The fund manager is Maura A. Shaughnessy and she has managed this utilities mutual fund since 1992.
Putnam Global Utilities A (PUGIX) invests primarily in utility companies worldwide. The fund concentrates on investing in large and mid-sized firms, but may also consider smaller companies. It seeks both capital appreciation and current income. The utilities mutual fund has a three year annualized return of 4.30%.
The utilities mutual fund has an expense ratio of 1.25% compared to a category average of 1.27%.
American Century Utilities (BULIX) seeks current income and capital appreciation. The fund invests the majority of its assets in securities listed on at least one index made up entirely of electricity, natural gas, cable television, water or sanitation services companies. The utilities mutual fund has a three year annualized return of 12.55%.
As of September 2013, this utilities mutual fund held 52 issues, with 9.14% of its total assets invested in AT&T Inc.
Invesco Dividend Income 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 12.70%.
The fund manager is Meggan Walsh and she has managed this utilities mutual fund since 2009.
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 16.43%.
The utilities mutual fund has a minimum initial investment of $15,000 and an expense ratio of 1.76% compared to a category average of 2.08%.
To view the Zacks Rank and past performance of all utilities mutual funds, investors can click here to see the complete list of funds.
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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.
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Read the analyst report on MMUFX
Read the analyst report on PUGIX
Read the analyst report on BULIX
Read the analyst report on FSTUX
Read the analyst report on UTPIX
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