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3 Top Energy Mutual Funds to Buy Amid Rising Oil Prices
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Oil prices at the moment are scaling upward primarily because of the demand-supply disparity. While the forthcoming driving season is expected to increase, demand for oil, supply on the other hand, remains tight.
In recent months, the biggest factor in ramping up energy prices worldwide has been the Russia-Ukraine war. It has been a brutal reminder that the world still relies on fossil fuels like oil, gas, and coal for 80% of its energy needs. Russia is the second-largest oil-producer in the world. Sanctions and embargoes placed on the country and pledges made by nations to cut their imports of oil and gas from Russia have eventually sent oil prices higher. By the way, last year, Hurricane Ida and the freezing of natural gas pipelines in Texas have already resulted in a shortage of oil supply. Organization of the Petroleum Exporting Countries, too, has been slow in increasing the production of crude oil to the pre-pandemic levels.
Nevertheless, West Texas Intermediate crude settled at $119.41 a barrel, up 0.8%, on Jun 7 after touching its highest level since Mar 8. Similarly, Brent crude came in at $120.57 a barrel, up 0.9%, its highest level since May 31.
With oil prices climbing northward, shares of oil companies are also moving higher. Incidentally, the United States is going through an inflationary period, with the Consumer Price Index continuing to remain elevated for now. Notably, the relentless increase in oil prices is driving inflation higher, thereby making investors believe that investing in solid oil stocks would certainly act as a hedge against inflation, which otherwise is responsible for dragging the broader market down.
Hence, astute investors should invest in energy mutual funds at present having oil companies as its major holdings. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
BNY Mellon Natural Resources Fund Class I (DLDRX - Free Report) invests the majority of its net assets, in stocks of companies in the natural resources and natural resources-related sectors. It invests in growth and value stocks and typically will maintain exposure to the major natural resources sectors. DLDRX invests in companies of any market cap.
Albert Chu has been the lead manager of DLDRX since Oct 29, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 4.8% in Devon Energy, 4.6% in Occidental Petroleum and 4.4% in Hess Corp.
DLDRX’s 3-year and 5-year annualized returns are 26.4% and 16.3%, respectively. Its net expense ratio is 0.96% compared to the category average of 1.11%. DLDRX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Advisor Energy Fund (FANIX - Free Report) invests the majority of its total assets in securities of companies principally engaged in the energy field, including the conventional areas of oil, gas, electricity and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power. FANIX, a non-diversified fund, factors in the issuer’s financial health, industry position and market conditions in its investment decisions.
Maurice FitzMaurice has been the lead manager of FANIX since Dec 31, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three top holdings for the fund are 21.9% in Exxon Mobil, 8.1% in Chevron and 5.7% in ConocoPhillips.
FANIX’s 3-year and 5-year annualized returns are 10.6% and 5.7%, respectively. Its net expense ratio is 0.76% compared to the category average of 1.07%. FANIX has a Zacks Mutual Fund Rank #1.
PGIM Jennison Natural Resources Fund - Class R6 (PJNQX - Free Report) invests the majority of its investable assets in equity and equity-related securities of natural resource companies and in asset-based securities. PJNQX, a non-diversified fund, invests primarily in common stock.
Neil P. Brown has been the lead manager of PJNQX since Jul 30, 2006, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 5.3% in ConocoPhillips, 5.1% in Devon Energy, and 4.7% in PDC Energy.
PJNQX’s 3-year and 5-year annualized returns are 19.3% and 10.4%, respectively. Its net expense ratio is 0.81% compared to the category average of 1.11%. PJNQX has a Zacks Mutual Fund Rank #2.
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3 Top Energy Mutual Funds to Buy Amid Rising Oil Prices
Oil prices at the moment are scaling upward primarily because of the demand-supply disparity. While the forthcoming driving season is expected to increase, demand for oil, supply on the other hand, remains tight.
In recent months, the biggest factor in ramping up energy prices worldwide has been the Russia-Ukraine war. It has been a brutal reminder that the world still relies on fossil fuels like oil, gas, and coal for 80% of its energy needs. Russia is the second-largest oil-producer in the world. Sanctions and embargoes placed on the country and pledges made by nations to cut their imports of oil and gas from Russia have eventually sent oil prices higher. By the way, last year, Hurricane Ida and the freezing of natural gas pipelines in Texas have already resulted in a shortage of oil supply. Organization of the Petroleum Exporting Countries, too, has been slow in increasing the production of crude oil to the pre-pandemic levels.
Nevertheless, West Texas Intermediate crude settled at $119.41 a barrel, up 0.8%, on Jun 7 after touching its highest level since Mar 8. Similarly, Brent crude came in at $120.57 a barrel, up 0.9%, its highest level since May 31.
With oil prices climbing northward, shares of oil companies are also moving higher. Incidentally, the United States is going through an inflationary period, with the Consumer Price Index continuing to remain elevated for now. Notably, the relentless increase in oil prices is driving inflation higher, thereby making investors believe that investing in solid oil stocks would certainly act as a hedge against inflation, which otherwise is responsible for dragging the broader market down.
Hence, astute investors should invest in energy mutual funds at present having oil companies as its major holdings. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
BNY Mellon Natural Resources Fund Class I (DLDRX - Free Report) invests the majority of its net assets, in stocks of companies in the natural resources and natural resources-related sectors. It invests in growth and value stocks and typically will maintain exposure to the major natural resources sectors. DLDRX invests in companies of any market cap.
Albert Chu has been the lead manager of DLDRX since Oct 29, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 4.8% in Devon Energy, 4.6% in Occidental Petroleum and 4.4% in Hess Corp.
DLDRX’s 3-year and 5-year annualized returns are 26.4% and 16.3%, respectively. Its net expense ratio is 0.96% compared to the category average of 1.11%. DLDRX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Advisor Energy Fund (FANIX - Free Report) invests the majority of its total assets in securities of companies principally engaged in the energy field, including the conventional areas of oil, gas, electricity and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power. FANIX, a non-diversified fund, factors in the issuer’s financial health, industry position and market conditions in its investment decisions.
Maurice FitzMaurice has been the lead manager of FANIX since Dec 31, 2019, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three top holdings for the fund are 21.9% in Exxon Mobil, 8.1% in Chevron and 5.7% in ConocoPhillips.
FANIX’s 3-year and 5-year annualized returns are 10.6% and 5.7%, respectively. Its net expense ratio is 0.76% compared to the category average of 1.07%. FANIX has a Zacks Mutual Fund Rank #1.
PGIM Jennison Natural Resources Fund - Class R6 (PJNQX - Free Report) invests the majority of its investable assets in equity and equity-related securities of natural resource companies and in asset-based securities. PJNQX, a non-diversified fund, invests primarily in common stock.
Neil P. Brown has been the lead manager of PJNQX since Jul 30, 2006, and most of the fund’s exposure is to the energy sector, primarily in oil exploration and production. Three major holdings for the fund are 5.3% in ConocoPhillips, 5.1% in Devon Energy, and 4.7% in PDC Energy.
PJNQX’s 3-year and 5-year annualized returns are 19.3% and 10.4%, respectively. Its net expense ratio is 0.81% compared to the category average of 1.11%. PJNQX has a Zacks Mutual Fund Rank #2.
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 >>