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During difficult market conditions, investors often turn to utilities mutual funds to protect their investments. This is because the demand for such services remains constant even during a downturn. Recently many utilities funds have increased their exposure to emerging markets and unregulated utilities companies. This has led to higher returns and a consequent increase in volatility. However, investors who are relatively risk averse can continue to rely on these funds for a steady income flow over the long term.
Below we will share with you 5 top rated utilities 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, then click here.
Fidelity Advisor Utilities A (FKUTX) invests the majority of its assets in public utility companies as well as firms deriving a large share of revenues from related operations. It purchases both domestic and foreign securities. The fund returned 26.58% in the last one year period and has a five year annualized return of 4.78%.
This utilities fund has a minimum initial investment of $2,500 and an expense ratio of 1.26% compared to a category average of 1.40%.
Van Kampen Utility A seeks current income and capital appreciation. It invests in a combination of common stocks and income generating securities issued by companies from the utilities sector. The fund may purchase preferred stock and debt securities, as well as convertible securities. The fund returned 18.05% in the last one year period.
As of December 2009, this utilities fund held 47 issues, with 7.82% of its total assets invested in Exelon Corporation.
Putnam Global Utilities A (PUGIX) invests primarily in utility companies worldwide. The fund concentrates on large and mid-sized firms, but may also consider smaller companies. It seeks both capital appreciation and current income. This utilities fund has a five year annualized return of 3.47%.
The fund manager is Michael R. Yogg and he has managed this utilities fund since 2000.
Vanguard Utilities Index Admiral Shares (VUIAX - MF report) seeks to track the performance of the MSCI U.S. Investable Market Utilities Index. This index consists of companies in the utilities sector regardless of their market capitalization. The fund uses a passive management investment approach to track the index. This utilities fund returned 22.55% over the last one year period.
The utilities fund has an expense ratio of 0.28% compared to a category average of 1.40%.
MFS Utilities A (MMUFX) invests the majority of its assets issued by companies from the utilities sector. It focuses on purchasing equity securities but may also purchase debt instruments. Most of the debt securities held are rated investment grade, but the fund may also consider investing in securities of lower quality. This utilities fund returned 44.62% over the last one year period and has a ten year annualized return of 4.6%.
The fund manager is Maura A. Shaughnessy and she has managed this utilities fund since 1992.
To view the Zacks Rank and past performance of all utilities funds, then click here.
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/mutualfund/