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Oil Prices Up on OPEC Output Cut: 3 Energy Mutual Funds to Buy
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Oil prices have been rising worldwide since the start of the Russia-Ukraine war. Sanctions and embargoes placed on Russia and measures taken by nations to cut their imports of oil and gas from Russia have sent oil prices over the roof. Over the last 12 months, the S&P 500 Select Sector SPDR for Energy has risen 44.4%, banking on an increase in oil prices.
In fact, oil prices have been rising in recent weeks primarily because the OPEC announced that it will cut its oil production by 2 million barrels/day despite the existing global supply issues. In the United States, the department of energy has decided to release an additional 10 million barrels from the Strategic Petroleum Reserve in November in response to the announcement made by the OPEC and as part of broader efforts made by the government to ease market disruptions caused by Russia’s ongoing war on Ukraine.
On Oct 19, Brent crude futures settled up 2.6% at $92.41 per barrel, while WTI crude increased 2.7% to close at $85.55 per barrel. With China, the world’s largest oil importer, renewing its demand, prices are expected to continue trending upward.
Shares of oil companies are also moving higher. With the United States going through inflationary times, investing in solid oil stocks would act as a hedge.
Hence, astute investors should now invest in energy mutual funds having oil companies as its major holdings. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected three mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
BNY Mellon Natural Resources Fund (DLDRX - Free Report) invests the majority of its net assets, in stocks of companies in the natural resources and natural resources-related sectors. It invests in growth and value stocks and typically maintains exposure to the major natural resources sectors. DLDRX invests in companies of any market cap.
Albert Chu has been the lead manager of DLDRX since Oct 29, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 4.5% in Occidental Petroleum, 4.2% in Equinor and 4.2% in Hess Corporation.
DLDRX’s 3-year and 5-year annualized returns are 23.2% and 12.1%, respectively. Its net expense ratio is 0.91% compared to the category average of 1.11%. DLDRX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Cavanal Hill World Energy Fund (AIWEX - Free Report) invests the majority of its total assets in a wide range of energy-related financial instruments issued in the United States and markets around the world. Investments made by AIWEX usually include a combination of common stock, bonds, exchange-traded funds and exchange-traded notes but may also include other asset types related to energy industry activities.
Thomas W. Verdel has been the lead manager of AIWEX since Feb 3, 2014, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three top holdings for the fund are 7% in Exxon Mobil, 6.4% in Occidental Petroleum and 4.2% in Marathon Oil.
AIWEX’s 3-year and 5-year annualized returns are 19.7% and 7%, respectively. Its net expense ratio is 0.90% compared to the category average of 1.07%. AIWEX has a Zacks Mutual Fund Rank #2.
Fidelity Select Portfolios - Energy Portfolio (FSENX - Free Report) seeks capital appreciation by investing the majority of its assets in common stocks of companies principally engaged in the energy field, including the conventional areas of oil, gas, electricity, and coal, and newer sources of energy. FSENX offers dividends and capital gains in the month of April and December.
Maurice FitzMaurice has been the lead manager of FSENX since Dec 31, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 19.5% in Exxon Mobil, 7.2% in Chevron, and 5.3% in Cenovus Energy.
FSENX’s 3-year and 5-year annualized returns are 14.7% and 5.1%, respectively. Its net expense ratio is 0.77% compared to the category average of 1.33%. FSENX has a Zacks Mutual Fund Rank #2.
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Oil Prices Up on OPEC Output Cut: 3 Energy Mutual Funds to Buy
Oil prices have been rising worldwide since the start of the Russia-Ukraine war. Sanctions and embargoes placed on Russia and measures taken by nations to cut their imports of oil and gas from Russia have sent oil prices over the roof. Over the last 12 months, the S&P 500 Select Sector SPDR for Energy has risen 44.4%, banking on an increase in oil prices.
In fact, oil prices have been rising in recent weeks primarily because the OPEC announced that it will cut its oil production by 2 million barrels/day despite the existing global supply issues. In the United States, the department of energy has decided to release an additional 10 million barrels from the Strategic Petroleum Reserve in November in response to the announcement made by the OPEC and as part of broader efforts made by the government to ease market disruptions caused by Russia’s ongoing war on Ukraine.
On Oct 19, Brent crude futures settled up 2.6% at $92.41 per barrel, while WTI crude increased 2.7% to close at $85.55 per barrel. With China, the world’s largest oil importer, renewing its demand, prices are expected to continue trending upward.
Shares of oil companies are also moving higher. With the United States going through inflationary times, investing in solid oil stocks would act as a hedge.
Hence, astute investors should now invest in energy mutual funds having oil companies as its major holdings. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected three mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
BNY Mellon Natural Resources Fund (DLDRX - Free Report) invests the majority of its net assets, in stocks of companies in the natural resources and natural resources-related sectors. It invests in growth and value stocks and typically maintains exposure to the major natural resources sectors. DLDRX invests in companies of any market cap.
Albert Chu has been the lead manager of DLDRX since Oct 29, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 4.5% in Occidental Petroleum, 4.2% in Equinor and 4.2% in Hess Corporation.
DLDRX’s 3-year and 5-year annualized returns are 23.2% and 12.1%, respectively. Its net expense ratio is 0.91% compared to the category average of 1.11%. DLDRX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Cavanal Hill World Energy Fund (AIWEX - Free Report) invests the majority of its total assets in a wide range of energy-related financial instruments issued in the United States and markets around the world. Investments made by AIWEX usually include a combination of common stock, bonds, exchange-traded funds and exchange-traded notes but may also include other asset types related to energy industry activities.
Thomas W. Verdel has been the lead manager of AIWEX since Feb 3, 2014, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three top holdings for the fund are 7% in Exxon Mobil, 6.4% in Occidental Petroleum and 4.2% in Marathon Oil.
AIWEX’s 3-year and 5-year annualized returns are 19.7% and 7%, respectively. Its net expense ratio is 0.90% compared to the category average of 1.07%. AIWEX has a Zacks Mutual Fund Rank #2.
Fidelity Select Portfolios - Energy Portfolio (FSENX - Free Report) seeks capital appreciation by investing the majority of its assets in common stocks of companies principally engaged in the energy field, including the conventional areas of oil, gas, electricity, and coal, and newer sources of energy. FSENX offers dividends and capital gains in the month of April and December.
Maurice FitzMaurice has been the lead manager of FSENX since Dec 31, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 19.5% in Exxon Mobil, 7.2% in Chevron, and 5.3% in Cenovus Energy.
FSENX’s 3-year and 5-year annualized returns are 14.7% and 5.1%, respectively. Its net expense ratio is 0.77% compared to the category average of 1.33%. FSENX has a Zacks Mutual Fund Rank #2.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>