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Investors looking for stable current income would do well to consider utility funds. They are 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. Though this strategy has increased the risk involved, it has also generated higher returns.
Thus, investing in utilities mutual funds seems prudent as of now. However, choosing the right mutual funds for your portfolio can become cumbersome. To that end, let us find out which of the two funds discussed below is better.
The fund invests a bulk of its assets in common stocks and other equity securities of companies which are included in one or more of the S-Network Global Water Index (Composite), the NASDAQ OMX US Water Index, the S&P Global Water Index and the Global Water Index. The fund seeks capital growth for the long run by investing in companies involved in water-linked activities.
This Sector - Utilities product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 29.5% over the 1-year and 16.2% of the 3-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Meanwhile, as of the last filing, Xylem Inc. and American Water Works Company, Inc. were the top holdings for Virtus AllianzGI Water Fund Class A.
This Zacks Mutual Fund Rank #1 (Strong Buy) was incepted in April 2008 and is managed by Virtus Funds. AWTAX carries an expense ratio of 1.22% and requires a minimum initial investment of $2,500.
The fund seeks growth in capital. The fund invests the majority of its assets in securities of companies primarily involved in the utilities industry and companies deriving a large portion of their revenues from their utility operations.
This Sector - Utilities product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 16.2% over the 1-year and 7.6% of the 3-year period. To see how this fund performed compared to its category, and other #1 and #2 Ranked Mutual Funds, please click here.
Meanwhile, as of the last filing, Nextera Energy Inc. and The Southern Company were the top holdings of Fidelity Select Utilities Portfolio.
This Zacks Mutual Fund Rank #1 fund was incepted in December 1981 and is managed by Fidelity. FSUTX carries an expense ratio of 0.76% and requires no minimum initial investment.
To Conclude
While both AWTAX and FSUTX are buy-rated funds, upon having a closer look we find that FSUTX is a clear winner. Not only are FSUTX’s operating and administrative expenses slightly lower compared AWTAX, it also has a history of providing consistent returns. Therefore, taking into consideration all the factors, FSUTX should be on your radar as it has a history of providing better returns at marginally lower costs.
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AWTAX or FSUTX: Which fund Should You Buy?
Investors looking for stable current income would do well to consider utility funds. They are 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. Though this strategy has increased the risk involved, it has also generated higher returns.
Thus, investing in utilities mutual funds seems prudent as of now. However, choosing the right mutual funds for your portfolio can become cumbersome. To that end, let us find out which of the two funds discussed below is better.
Virtus AllianzGI Water Fund Class A (AWTAX - Free Report)
The fund invests a bulk of its assets in common stocks and other equity securities of companies which are included in one or more of the S-Network Global Water Index (Composite), the NASDAQ OMX US Water Index, the S&P Global Water Index and the Global Water Index. The fund seeks capital growth for the long run by investing in companies involved in water-linked activities.
This Sector - Utilities product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 29.5% over the 1-year and 16.2% of the 3-year period. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Meanwhile, as of the last filing, Xylem Inc. and American Water Works Company, Inc. were the top holdings for Virtus AllianzGI Water Fund Class A.
This Zacks Mutual Fund Rank #1 (Strong Buy) was incepted in April 2008 and is managed by Virtus Funds. AWTAX carries an expense ratio of 1.22% and requires a minimum initial investment of $2,500.
Fidelity Select Utilities Portfolio (FSUTX - Free Report)
The fund seeks growth in capital. The fund invests the majority of its assets in securities of companies primarily involved in the utilities industry and companies deriving a large portion of their revenues from their utility operations.
This Sector - Utilities product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 16.2% over the 1-year and 7.6% of the 3-year period. To see how this fund performed compared to its category, and other #1 and #2 Ranked Mutual Funds, please click here.
Meanwhile, as of the last filing, Nextera Energy Inc. and The Southern Company were the top holdings of Fidelity Select Utilities Portfolio.
This Zacks Mutual Fund Rank #1 fund was incepted in December 1981 and is managed by Fidelity. FSUTX carries an expense ratio of 0.76% and requires no minimum initial investment.
To Conclude
While both AWTAX and FSUTX are buy-rated funds, upon having a closer look we find that FSUTX is a clear winner. Not only are FSUTX’s operating and administrative expenses slightly lower compared AWTAX, it also has a history of providing consistent returns. Therefore, taking into consideration all the factors, FSUTX should be on your radar as it has a history of providing better returns at marginally lower costs.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>