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3 Energy Mutual Funds to Gain From Rising Oil Prices
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The nagging geopolitical tension between Russia and Ukraine that remains to date have created enormous energy shortage across the globe. This crisis has elevated inflation levels in many counties, especially in Europe, which was heavily dependent on the Russian energy supply. The prices of continuous contracts for WTI Crude and Brent crude oil have given a positive return of 22.40% and 18.63% in a month.
Oil prices have surged after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, decided to cut oil production by 1.66 million barrels per day from May till the end of 2023. The oil prices are expected to be higher in the second half of this year due to tightness in global oil markets. OPEC reiterated its 2023 forecast for global oil demand growth unchanged at an increase by 2.32 million barrels per day (bpd) in 2023 to reach 101.9 million bpd.
Domestically, the United States has replaced Russia as the biggest oil supplier to the European Union. The U.S. domestic oil production is back to the pre-Covid level, which is around 11.9 million barrels per day.
The oil and gas companies can give significant capital appreciation and dividend income during periods of high oil and gas prices. Geopolitical tensions are likely to keep markets volatile for some time, with the energy sector making the most of the opportunity. So, investing in funds with exposure to energy equities is likely to help in the near term.
We have thus selected three energy sector mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Energy Fund (FANIX - Free Report) invests most of its net assets in common stocks of domestic and foreign companies that are 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. FSHCX advisors choose to invest in stocks based on fundamental analysis factors such as the issuer's financial condition, industry position, as well as market and economic conditions.
Maurice FitzMaurice has been the lead manager of FANIX since Jan 1, 2020. Of its net asset, the fund has invested 23.82% in Exxon Mobil, 6.61% in Chevron and 5.07% in ConocoPhillips as of 1/31/2023.
FANIX’s three-year and five-year annualized returns are 50.7% and 7.2%, respectively. FANIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74% which is less than the category average of 1.07%
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
Cavanal Hill World Energy Fund (AIWEX - Free Report) invests most of its net assets in energy-related financial instruments in the United States, including common stock, bonds, exchange-traded funds and exchange-traded notes. AIWEX also invests a small portion of its net assets in securities of issuers having their principal place of business outside the United States or doing a substantial amount of business outside the United States.
Michael P. Maurer has been the lead manager of AIWEXsince Feb 4, 2014. Of its net assets, the fund has invested 6.67% in Occidental Petroleum, 4.26% in Halliburton and 3.72% in Exxon Mobil as of 11/30/2022.
AIWEX’s three-year and five-year annualized returns are 39.8% and 8.7%, respectively. AIWEX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.90%, which is less than the category average of 1.07%.
Vanguard Energy Fund (VGENX - Free Report) invests most of its net assets in common stocks of companies that are engaged in the exploration, production, and transmission of energy or energy fuels, and various services and making related to the component used in production for such activities as energy research, energy conservation, and pollution control. VGENX is a non-diversified fund.
G. Thomas Levering has been the lead manager of VGENX since Jan 16, 2020. Of its net asset, the fund has invested 7.94% in ConocoPhillips, 4.24% in BP and 3.32% in Chesapeake Energy as of 10/31/2022.
VGENX’s three-year and five-year annualized returns are 15.6% and 9.2%, respectively. VGENX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.43%, which is less than the category average of 1.07%.
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3 Energy Mutual Funds to Gain From Rising Oil Prices
The nagging geopolitical tension between Russia and Ukraine that remains to date have created enormous energy shortage across the globe. This crisis has elevated inflation levels in many counties, especially in Europe, which was heavily dependent on the Russian energy supply. The prices of continuous contracts for WTI Crude and Brent crude oil have given a positive return of 22.40% and 18.63% in a month.
Oil prices have surged after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, decided to cut oil production by 1.66 million barrels per day from May till the end of 2023. The oil prices are expected to be higher in the second half of this year due to tightness in global oil markets. OPEC reiterated its 2023 forecast for global oil demand growth unchanged at an increase by 2.32 million barrels per day (bpd) in 2023 to reach 101.9 million bpd.
Domestically, the United States has replaced Russia as the biggest oil supplier to the European Union. The U.S. domestic oil production is back to the pre-Covid level, which is around 11.9 million barrels per day.
The oil and gas companies can give significant capital appreciation and dividend income during periods of high oil and gas prices. Geopolitical tensions are likely to keep markets volatile for some time, with the energy sector making the most of the opportunity. So, investing in funds with exposure to energy equities is likely to help in the near term.
We have thus selected three energy sector mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Energy Fund (FANIX - Free Report) invests most of its net assets in common stocks of domestic and foreign companies that are 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. FSHCX advisors choose to invest in stocks based on fundamental analysis factors such as the issuer's financial condition, industry position, as well as market and economic conditions.
Maurice FitzMaurice has been the lead manager of FANIX since Jan 1, 2020. Of its net asset, the fund has invested 23.82% in Exxon Mobil, 6.61% in Chevron and 5.07% in ConocoPhillips as of 1/31/2023.
FANIX’s three-year and five-year annualized returns are 50.7% and 7.2%, respectively. FANIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74% which is less than the category average of 1.07%
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
Cavanal Hill World Energy Fund (AIWEX - Free Report) invests most of its net assets in energy-related financial instruments in the United States, including common stock, bonds, exchange-traded funds and exchange-traded notes. AIWEX also invests a small portion of its net assets in securities of issuers having their principal place of business outside the United States or doing a substantial amount of business outside the United States.
Michael P. Maurer has been the lead manager of AIWEXsince Feb 4, 2014. Of its net assets, the fund has invested 6.67% in Occidental Petroleum, 4.26% in Halliburton and 3.72% in Exxon Mobil as of 11/30/2022.
AIWEX’s three-year and five-year annualized returns are 39.8% and 8.7%, respectively. AIWEX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.90%, which is less than the category average of 1.07%.
Vanguard Energy Fund (VGENX - Free Report) invests most of its net assets in common stocks of companies that are engaged in the exploration, production, and transmission of energy or energy fuels, and various services and making related to the component used in production for such activities as energy research, energy conservation, and pollution control. VGENX is a non-diversified fund.
G. Thomas Levering has been the lead manager of VGENX since Jan 16, 2020. Of its net asset, the fund has invested 7.94% in ConocoPhillips, 4.24% in BP and 3.32% in Chesapeake Energy as of 10/31/2022.
VGENX’s three-year and five-year annualized returns are 15.6% and 9.2%, respectively. VGENX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.43%, which is less than the category average of 1.07%.
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 >>