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Mutual Fund Commentary

Even during difficult economic conditions, the demand for essential services such as utilities remains more or less constant. This is why utilities funds are an excellent choice for investors who are seeking a steady income flow through consistent yields from dividends. In fact, investments in this sector are usually considered to be a conservative investment option. Moreover, in the past utilities funds have ventured into emerging markets and provided appreciably higher returns at relatively lower levels of risk.

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.

Franklin Utilities A (FKUTX - MF report) seeks appreciably high total return. The fund 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 13.63%.

The utilities mutual fund has an expense ratio of 0.76% compared to a category average of 1.34%.

Vanguard Utilities Index Fund Admiral Shares (VUIAX - MF report) invests heavily in all the securities that are included in the MSCI U.S. Investable Market Index (IMI)/ Utilities 25/50. This index consists of companies of all market capitalizations from the utilities sector. The utilities mutual fund has a one year annualized return of 10.41%.

Donald M. Butler is the fund manager and he has managed this utilities mutual fund since 2004.

Fidelity Advisor Utilities A (FUGAX - MF report) seeks capital growth. The fund focuses mainly on common stocks and invests heavily in public utility companies and also in those entities which earn a major chunk of their revenues from related operations. It focuses on domestic as well as foreign securities. The utilities mutual fund has a one year annualized return of 12.26%.

As of September 2012, this utilities mutual fund held 27 issues, with 14.32% of its total assets invested in Duke Energy Corporation.

MFS Utilities A (MMUFX - MF report) invests the majority of its assets in securities of companies those are engaged in the public utility businesses. It seeks total return and generally concentrates on equities but may also purchase debt securities. The fund may also hold debt securities that are rated below investment grade. This utilities mutual fund has a one year annualized return of 12.23%.

The utilities mutual fund has an expense ratio of 1.04% compared to a category average of 1.34%.

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 7.15%.

Mario J. Gabelli is the fund manager and he has managed this utilities mutual fund since 1999.

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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