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3 Energy Mutual Funds Likely to Generate High Returns
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Russia and Saudi Arabia recently extended their voluntary oil production cuts until the end of the year, which has caused significant turbulence in the global oil markets.
Russia, as the leader of the OPEC+ coalition, has decided to increase its oil production by 300,000 barrels per day starting in September. Moreover, Russia has decided to maintain export restrictions of 300,000 barrels per day until the end of 2023. In conjunction with Saudi Arabia's commitment to a daily cut of 1 million barrels in crude oil output, these measures played a critical role in driving up oil prices. This extension represents Saudi Arabia's third consecutive effort toward voluntarily reducing output, a testament to its unwavering dedication to ensuring market stability.
On Sep 13, the price of the global benchmark, Brent crude oil saw an increase of $1.42 per barrels to $92.06 per barrels. Likewise, the price of the U.S. benchmark WTI crude oil rose by $1.55 to $88.84 per barrels. The figures marked peak levels for both bench marks since November 2022.
For investors seeking opportunities in the constantly evolving energy landscape, an energy mutual fund offers an appealing choice. The strength in oil prices continues due to the commitment of major oil-producing nations to limit production. This positive trend bodes well for investments in the energy sector. Energy mutual funds typically consist of a diverse portfolio of companies involved in different aspects of the industry, such as oil and gas exploration, production, refining and renewable energy sources.
From an investment standpoint, we have selected three energy mutual funds with oil companies as their major holdings. Mutual funds, in general, reduce transaction costs and diversify the portfolio without commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
The selected funds 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.
T. Rowe Price New Era Fund (PRNEX - Free Report) seeks long-term capital appreciation by investing primarily in the common stocks of companies that own or develop natural resources and other basic commodities and in the stocks of selected non-resource growth companies.
Shinwoo Kim has been the lead manager of PRNEX since May 31, 2021. Most of the fund's holdings were in companies like TotalEnergies SE (3.4%), Exxon Mobil Corp (3.3%) and ConocoPhillips (3.1%) as of Jun 30, 2023.
PRNEX's 3-year and 5-year returns are 17% and 5.5%, respectively. The annual expense ratio is 0.74% compared with the category average of 1.11%. PRNEX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Energy Fund (FSENX - Free Report) seeks long-term capital appreciation by investing primarily 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 such as nuclear, geothermal, oil shale, and solar power.
Maurice FitzMaurice has been the lead manager of FSENX since Dec 31, 2019. Most of the fund's holdings were in companies like Exxon Mobil Corp (24.9%), Chevron Corp (6.9%) and ConocoPhillips (4.9%) as of May 31, 2023.
FSENX’s 3-year and 5-year annualized returns are 44.4% and 7.2%, respectively. Its net expense ratio is 0.73% compared to the category average of 1.07%. FSENX has a Zacks Mutual Fund Rank #1.
Franklin Natural Resources Fund (FRNRX - Free Report) seeks capital appreciation by investing in its net assets in companies that own, produce, refine, process, transport and market natural resources, as well as those that provide related services.
Steve M. Land has been the lead manager of FRNRX since Mar 31, 1999. Most of the fund's holdings were in companies like ConocoPhillips (4.4%), Exxon Mobil Corp (4.3%) and Chevron Corp (4%) as of Apr 30, 2023.
FRNRX's 3-year and 5-year returns are 28.7% and 4.2%, respectively. The annual expense ratio is 0.96% compared with the category average of 1.11%. FRNRX has a Zacks Mutual Fund Rank #2.
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3 Energy Mutual Funds Likely to Generate High Returns
Russia and Saudi Arabia recently extended their voluntary oil production cuts until the end of the year, which has caused significant turbulence in the global oil markets.
Russia, as the leader of the OPEC+ coalition, has decided to increase its oil production by 300,000 barrels per day starting in September. Moreover, Russia has decided to maintain export restrictions of 300,000 barrels per day until the end of 2023. In conjunction with Saudi Arabia's commitment to a daily cut of 1 million barrels in crude oil output, these measures played a critical role in driving up oil prices. This extension represents Saudi Arabia's third consecutive effort toward voluntarily reducing output, a testament to its unwavering dedication to ensuring market stability.
On Sep 13, the price of the global benchmark, Brent crude oil saw an increase of $1.42 per barrels to $92.06 per barrels. Likewise, the price of the U.S. benchmark WTI crude oil rose by $1.55 to $88.84 per barrels. The figures marked peak levels for both bench marks since November 2022.
For investors seeking opportunities in the constantly evolving energy landscape, an energy mutual fund offers an appealing choice. The strength in oil prices continues due to the commitment of major oil-producing nations to limit production. This positive trend bodes well for investments in the energy sector. Energy mutual funds typically consist of a diverse portfolio of companies involved in different aspects of the industry, such as oil and gas exploration, production, refining and renewable energy sources.
From an investment standpoint, we have selected three energy mutual funds with oil companies as their major holdings. Mutual funds, in general, reduce transaction costs and diversify the portfolio without commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
The selected funds 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.
T. Rowe Price New Era Fund (PRNEX - Free Report) seeks long-term capital appreciation by investing primarily in the common stocks of companies that own or develop natural resources and other basic commodities and in the stocks of selected non-resource growth companies.
Shinwoo Kim has been the lead manager of PRNEX since May 31, 2021. Most of the fund's holdings were in companies like TotalEnergies SE (3.4%), Exxon Mobil Corp (3.3%) and ConocoPhillips (3.1%) as of Jun 30, 2023.
PRNEX's 3-year and 5-year returns are 17% and 5.5%, respectively. The annual expense ratio is 0.74% compared with the category average of 1.11%. PRNEX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Energy Fund (FSENX - Free Report) seeks long-term capital appreciation by investing primarily 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 such as nuclear, geothermal, oil shale, and solar power.
Maurice FitzMaurice has been the lead manager of FSENX since Dec 31, 2019. Most of the fund's holdings were in companies like Exxon Mobil Corp (24.9%), Chevron Corp (6.9%) and ConocoPhillips (4.9%) as of May 31, 2023.
FSENX’s 3-year and 5-year annualized returns are 44.4% and 7.2%, respectively. Its net expense ratio is 0.73% compared to the category average of 1.07%. FSENX has a Zacks Mutual Fund Rank #1.
Franklin Natural Resources Fund (FRNRX - Free Report) seeks capital appreciation by investing in its net assets in companies that own, produce, refine, process, transport and market natural resources, as well as those that provide related services.
Steve M. Land has been the lead manager of FRNRX since Mar 31, 1999. Most of the fund's holdings were in companies like ConocoPhillips (4.4%), Exxon Mobil Corp (4.3%) and Chevron Corp (4%) as of Apr 30, 2023.
FRNRX's 3-year and 5-year returns are 28.7% and 4.2%, respectively. The annual expense ratio is 0.96% compared with the category average of 1.11%. FRNRX 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 >>