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3 Top Utility Funds to Buy Amid Ongoing Market Volatility
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Volatility has returned to Wall Street after a solid beginning this year as optimism surrounding the Federal Reserve’s rate cut dimmed following a spate of unimpressive economic data. Inflation jumped in January, while industrial production and retail sales unexpectedly declined over the same time frame.
This saw the Dow declining 1.4% on Feb 13 to record its biggest single-day percentage drop since Mar 22, 2023. The S&P 500 also fell 1.4% after surpassing the 5,000-point milestone for the first time last week, while the Nasdaq edged 1.8% lower.
An unexpected jump in inflation saw the consumer price index rising 0.3% month over month in January, higher than the consensus estimate of 0.2% and up 3.1% from the year-ago period.
Core CPI, which strips out the volatile energy and food prices, increased 0.4% sequentially in January, while the year-over-year rise was 3.1%.
Separately, the Commerce Department reported on Feb 15 that retail sales unexpectedly fell 0.8% in January as buyers took a break after a busy holiday season.
Also, industrial production fell 0.1% in January, with manufacturing alone declining 0.5%.
Market participants were expecting the Federal Reserve to start its rate cuts in March. The Fed had earlier said that it planned to go for multiple rate cuts this year, which raised optimism that the first 25 basis point rate cut could come in March.
However, the optimism has faded substantially over the past few days and investors are once again unable to gauge the timing of the first rate cut by the Federal Reserve.
The volatility, which began earlier this week, could continue for a longer period as a March rate cut is unlikely and hopes of the first rate by the Fed in May have faded to a great extent.
Given the current conditions, utility mutual funds offer essential stability and growth potential, making them a prudent consideration for savvy investors.
3 Best Choices
We've identified three such utility mutual funds that have demonstrated impressive annualized returns over both 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy), require an initial investment of no more than $5,000, and have a low expense ratio.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Cohen & Steers Global Infrastructure A (CSUAX - Free Report) fund invests at least 80% of its total assets in U.S. and non-U.S. common stocks and other equity securities issued by infrastructure companies. CSUAX commits to investing a minimum of 40%, except under unfavorable market conditions as determined by the advisor, in companies organized or located outside the United States or conducting a significant portion of their business activities internationally.
CSUAX’s 3-year and 5-year annualized returns are 3.5% and 4.5%, respectively. Cohen & Steers Global Infrastructure A fund has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Franklin Utilities Fund (FKUTX - Free Report) invests the majority of its net assets in equity securities of the public utility sector. The objective of this fund is to seek capital appreciation and current income.
FKUTX’s 3-year and 5-year annualized returns are 4.2% and 5.5%, respectively. Franklin Utilities Fund has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Utilities (FSUTX - Free Report) fund seeks capital appreciation. FSUTX normally invests at least 80% of assets in common stocks of companies principally engaged in utilities industries and companies deriving the majority of their revenues from utilities operations.
FSUTX’s 3-year and 5-year annualized returns are 6% and 7.2%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #2. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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3 Top Utility Funds to Buy Amid Ongoing Market Volatility
Volatility has returned to Wall Street after a solid beginning this year as optimism surrounding the Federal Reserve’s rate cut dimmed following a spate of unimpressive economic data. Inflation jumped in January, while industrial production and retail sales unexpectedly declined over the same time frame.
This saw the Dow declining 1.4% on Feb 13 to record its biggest single-day percentage drop since Mar 22, 2023. The S&P 500 also fell 1.4% after surpassing the 5,000-point milestone for the first time last week, while the Nasdaq edged 1.8% lower.
An unexpected jump in inflation saw the consumer price index rising 0.3% month over month in January, higher than the consensus estimate of 0.2% and up 3.1% from the year-ago period.
Core CPI, which strips out the volatile energy and food prices, increased 0.4% sequentially in January, while the year-over-year rise was 3.1%.
Separately, the Commerce Department reported on Feb 15 that retail sales unexpectedly fell 0.8% in January as buyers took a break after a busy holiday season.
Also, industrial production fell 0.1% in January, with manufacturing alone declining 0.5%.
Market participants were expecting the Federal Reserve to start its rate cuts in March. The Fed had earlier said that it planned to go for multiple rate cuts this year, which raised optimism that the first 25 basis point rate cut could come in March.
However, the optimism has faded substantially over the past few days and investors are once again unable to gauge the timing of the first rate cut by the Federal Reserve.
The volatility, which began earlier this week, could continue for a longer period as a March rate cut is unlikely and hopes of the first rate by the Fed in May have faded to a great extent.
Given the current conditions, utility mutual funds offer essential stability and growth potential, making them a prudent consideration for savvy investors.
3 Best Choices
We've identified three such utility mutual funds that have demonstrated impressive annualized returns over both 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy), require an initial investment of no more than $5,000, and have a low expense ratio.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Cohen & Steers Global Infrastructure A (CSUAX - Free Report) fund invests at least 80% of its total assets in U.S. and non-U.S. common stocks and other equity securities issued by infrastructure companies. CSUAX commits to investing a minimum of 40%, except under unfavorable market conditions as determined by the advisor, in companies organized or located outside the United States or conducting a significant portion of their business activities internationally.
CSUAX’s 3-year and 5-year annualized returns are 3.5% and 4.5%, respectively. Cohen & Steers Global Infrastructure A fund has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Franklin Utilities Fund (FKUTX - Free Report) invests the majority of its net assets in equity securities of the public utility sector. The objective of this fund is to seek capital appreciation and current income.
FKUTX’s 3-year and 5-year annualized returns are 4.2% and 5.5%, respectively. Franklin Utilities Fund has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Utilities (FSUTX - Free Report) fund seeks capital appreciation. FSUTX normally invests at least 80% of assets in common stocks of companies principally engaged in utilities industries and companies deriving the majority of their revenues from utilities operations.
FSUTX’s 3-year and 5-year annualized returns are 6% and 7.2%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #2. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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 >>