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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.
ProFunds Utilities UltraSector (UTPIX - MF report) 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 22.48%.
Hratch S. Najarian is the fund manager and he has managed this utilities mutual fund since 2011.
Franklin Utilities A (FKUTX - MF report) concentrates on purchasing equity in public utilities companies and focuses on acquiring common stocks. More than 25% of its assets are invested in companies that provide electricity, gas, water and communication services. The utilities mutual fund has a three year annualized return of 17.71%.
As of March 2012, this utilities mutual fund held 57 issues, with 4.77% of its total assets invested in Exelon Corp.
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 utilities mutual fund is non-diversified and has a three year annualized return of 16.34%.
The utilities mutual fund has an expense ratio of 0.19% compared to a category average of 1.36%.
Fidelity Advisor Utilities A (FUGAX - MF report) invests the majority of its assets in public utility companies as well as those firms which derive a large share of revenues from related operations. The fund focuses on acquiring common stocks of both domestic and foreign companies. The utilities mutual fund has a three year annualized return of 17.22%.
Douglas Simmons is the fund manager and he has managed this utilities mutual fund since 2006.
Rydex Utilities (RYAUX - MF report) 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 is non-diversified and has a three year annualized return of 16.53%.
The utilities mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.87% compared to a category average of 1.36%.
To view the Zacks Rank and past performance of all utilities mutual funds, investors can click here to see the complete list of funds.
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.