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Mutual Fund Commentary

With every passing year, the world’s appetite for energy continues to increase steadily. Governments and corporations alike are therefore constantly on the lookout for new energy sources or more efficient technology in this domain. For fast growing economies such as China and India, the situation is even more acute. Thus, prices of these invaluable resources are surging and investors could benefit from the situation by investing in the energy industry. Energy mutual funds are a superior option for forays into the industry as they reduce risks involved by holding widely diversified portfolios.

Below we will share with you 5 top rated energy mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all energy funds, investors can click here to see the complete list of funds.

Waddell & Reed Energy A (WEGAX - MF report) seeks capital appreciation. The fund invests the majority of its assets in securities issued by energy companies. Companies engaged in exploration, discovery, production and distribution of energy constitute the fund’s major investments. The energy mutual fund has a three year annualized return of 7.22%.

The fund manager is David P. Ginther and he has managed this energy mutual fund since 2006.

Fidelity Select Natural Resources (FNARX - MF report) invests a large share of its assets in companies whose principal operations are related to natural resources or providing services to companies from the sector. The fund focuses on acquiring common stock and also invests in specific precious metals. This energy mutual fund has a three year annualized return of 7.78%.

The energy mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.84% compared to a category average of 1.58%.

Vanguard Energy Investor (VGENX - MF report) seeks capital growth over the long term. The fund utilizes the majority of its assets to purchase common stocks of companies whose primary activities are energy related, including those engaged in energy conservation. The energy mutual fund has a three year annualized return of 4.86%.

As of December 2012, this energy mutual fund held 135 issues, with 8.90% of its total assets invested in Exxon Mobil Corporation.

Guinness Atkinson Global Energy (GAGEX - MF report) invests heavily in equity securities of domestic and foreign companies engaged in exploration, discovery and distribution of energy as well as production of alternative energy. The energy mutual fund has a three year annualized return of 3.10%. < P> The energy mutual fund has a minimum initial investment of $5,000 and an expense ratio of 1.34% compared to a category average of 1.58%.

Ivy Global Natural Resources A (IGNAX - MF report) seeks capital appreciation. It invests heavily in equity securities of companies, whose primary operations are related to natural resources, including suppliers and service providers. It may invest in both foreign and domestic firms whose primary operations are conducted abroad. This energy mutual fund has a three year annualized return of -1.32%.

The fund manager is Fred Sturm and he has managed this energy mutual fund since 1997.

To view the Zacks Rank and past performance of all energy 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.

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