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Best of Funds

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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.

Invesco Utilities Investor (FSTUX - MF report) seeks capital growth over the long term. The fund 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 one year annualized return of 11.88%.

The utilities mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.32% compared to a category average of 1.27%.

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 one year annualized return of 16.99%.

John Kohli is the fund manager and he has managed this utilities mutual fund since 1998.

Gabelli Utilities AAA (GABUX - MF report) seeks appreciably high total return. The fund invests a large share of its assets in both domestic and foreign companies engaged in the utility businesses. A maximum of 40% of its assets can be invested in foreign companies. The utilities mutual fund has a one year annualized return of 14.41%.

As of June 2012, this utilities mutual fund held 283 issues, with 3.73% of its total assets invested in National Fuel Gas Company.

Allianz RCM Global Water (AWTAX - MF report) invests long term capital appreciation by investing majority of its assets in utility companies that are predominantly engaged in the water-related business. The fund may invest in non-U.S companies including emerging markets. This utilities mutual fund has a one year annualized return of 25.03%.

The utilities mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.68% compared to a category average of 1.45%.

American Century Utilities (BULIX - MF report) seeks current income and capital appreciation. The fund invests a large share 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 one year annualized return of 17.65%.

Lynette Pang is the fund manager and he has managed this utilities mutual fund since 2010.

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.

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