We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Energy Mutual Funds to Buy as Oil Nears 7-Week High
Read MoreHide Full Article
U.S. oil price stampeded into a bull-market territory; thanks to a fall in stockpiles and an increase in expectations that top oil producing countries will cap output. The oil market rally was also supported by a weak dollar, while hedge fund managers reversed their short positions on oil, mirroring their bullish stance.
With oil price poised to gain more ground, mutual funds having considerable exposure to the energy sector are poised to benefit. Hence, investing in such funds will be judicious.
Oil Gains, Inventory Declines
The WTI crude posted the third straight weekly gain on Friday, boosted by a decline in U.S. crude inventories. The WTI crude advanced 0.6% to settle at $48.52 a barrel, the highest since July 1. Prices also rose 9.1% last week, the highest since March.
Further, a 2.5 million barrel drop in domestic crude inventories in the week ending Aug 12, drove oil prices. Abundant supply of oil amid lackluster demand was weighing on prices for a considerable period of time. However, such concerns are a thing of the past courtesy of the unforeseen decline in stockpiles.
Production-Freeze Deals
Not only the drop in stockpiles, both Russia and Saudi Arabia’s willingness to consider a collective production cap pushed oil prices higher.Russian Energy Minister Alexander Novak said that his country is in consultation with Saudi Arabia and other oil producing nations to achieve stability in the oil market.
Saudi Arabia’s energy minister Khalid al-Falih also stated that the country is ready to take “any possible action” to rebalance the oil market, which is currently oversupplied. Russia and Saudi Arabia are two of the most important oil producing countries in the world, with Russia being the biggest non-OPEC producer and Saudi the de-facto leader of OPEC.
Weak U.S. Dollar
Along with the aforementioned reasons, a weak dollar is expected to drive oil prices further. This is because when the dollar weakens, oil prices rise and vice versa. Such an inverse relation occurs because oil is quoted in dollars and U.S. is the biggest importer of the commodity.
Last week, the greenback sold off against most of the major currencies. It reached multi-year lows against the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. U.S. dollar fell following the Fed’s decision to hold off rate hike at their July meeting. Most of the Fed officials refrained from adopting a hawkish stance as inflation continues to tread below the Fed’s targeted range (read more: Play 4 High-Yield Stocks as Fed Looks Less Hawkish).
Buy4 Energy Mutual Funds as Oil Price Rises
Oil price has been on the rise over the last seven weeks as U.S. inventory declines, renewed hopes of a global supply cap increases and U.S. dollar weakens. Hedge fund managers also increased their bullish long positions in crude oil, the most in over two months in the week ending Aug 9. Such net long positions were the largest since the middle of May. Hedge fund managers have trimmed their net long positions by a total of 309 million barrels between May 17 and Aug 2 (read more: Oil Prices Surging: Buy 4 Strong Momentum Energy Stocks).
Given this upward movement in oil price, investing in fundamentally solid energy mutual funds will be a prudent move. But, why mutual funds? This is because funds reduce transaction costs and diversify portfolios for investors without the several commission charges that stocks need to bear (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have picked four such mutual funds that possess a Zacks Mutual Fund Rank #1 (Strong Buy), have positive year-to-date and 1-year returns, minimum initial investments within $5000 and low expense ratios.
Columbia Global Energy & Natural Resources A invests the majority of its assets in equity securities of U.S. and foreign companies engaged in the energy and natural resources industries. NREAX’s year-to-date and 1-year returns are 18.2% and 3.9%, respectively. EENAX has an annual expense ratio of 1.32%, which is lower than the category average of 1.40%.
Fidelity Select Energy (FSENX - Free Report) invests a large portion of its assets in securities of companies principally engaged in the energy field. FSENX’s year-to-date and 1-year returns are 25.3% and 9%, respectively. The fund’s annual expense ratio is 0.79%, lower than the category average of 1.40%.
Vanguard Energy Investor (VGENX - Free Report) invests a large portion of its assets in the common stocks of companies principally engaged in activities in the energy industry, such as the exploration, production, and transmission of energy or energy fuels. VGENX’s year-to-date and 1-year returns are 27.5% and 12.9%, respectively. It has an annual expense ratio of 0.37%, below the category average of 1.40%.
Columbia Global Energy & Natural Resources I invests a major portion of its assets in equity of U.S. and foreign companies engaged in the energy and natural resources industries. CERIX’s year-to-date and 1-year returns are 18.6% and 4.4%, respectively. The annual expense ratio of CERIX is 0.84%, lower than the category average of 1.40%.
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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
4 Energy Mutual Funds to Buy as Oil Nears 7-Week High
U.S. oil price stampeded into a bull-market territory; thanks to a fall in stockpiles and an increase in expectations that top oil producing countries will cap output. The oil market rally was also supported by a weak dollar, while hedge fund managers reversed their short positions on oil, mirroring their bullish stance.
With oil price poised to gain more ground, mutual funds having considerable exposure to the energy sector are poised to benefit. Hence, investing in such funds will be judicious.
Oil Gains, Inventory Declines
The WTI crude posted the third straight weekly gain on Friday, boosted by a decline in U.S. crude inventories. The WTI crude advanced 0.6% to settle at $48.52 a barrel, the highest since July 1. Prices also rose 9.1% last week, the highest since March.
Further, a 2.5 million barrel drop in domestic crude inventories in the week ending Aug 12, drove oil prices. Abundant supply of oil amid lackluster demand was weighing on prices for a considerable period of time. However, such concerns are a thing of the past courtesy of the unforeseen decline in stockpiles.
Production-Freeze Deals
Not only the drop in stockpiles, both Russia and Saudi Arabia’s willingness to consider a collective production cap pushed oil prices higher.Russian Energy Minister Alexander Novak said that his country is in consultation with Saudi Arabia and other oil producing nations to achieve stability in the oil market.
Saudi Arabia’s energy minister Khalid al-Falih also stated that the country is ready to take “any possible action” to rebalance the oil market, which is currently oversupplied. Russia and Saudi Arabia are two of the most important oil producing countries in the world, with Russia being the biggest non-OPEC producer and Saudi the de-facto leader of OPEC.
Weak U.S. Dollar
Along with the aforementioned reasons, a weak dollar is expected to drive oil prices further. This is because when the dollar weakens, oil prices rise and vice versa. Such an inverse relation occurs because oil is quoted in dollars and U.S. is the biggest importer of the commodity.
Last week, the greenback sold off against most of the major currencies. It reached multi-year lows against the euro, British pound, Japanese yen, Swiss franc and Canadian dollar. U.S. dollar fell following the Fed’s decision to hold off rate hike at their July meeting. Most of the Fed officials refrained from adopting a hawkish stance as inflation continues to tread below the Fed’s targeted range (read more: Play 4 High-Yield Stocks as Fed Looks Less Hawkish).
Buy 4 Energy Mutual Funds as Oil Price Rises
Oil price has been on the rise over the last seven weeks as U.S. inventory declines, renewed hopes of a global supply cap increases and U.S. dollar weakens. Hedge fund managers also increased their bullish long positions in crude oil, the most in over two months in the week ending Aug 9. Such net long positions were the largest since the middle of May. Hedge fund managers have trimmed their net long positions by a total of 309 million barrels between May 17 and Aug 2 (read more: Oil Prices Surging: Buy 4 Strong Momentum Energy Stocks).
Given this upward movement in oil price, investing in fundamentally solid energy mutual funds will be a prudent move. But, why mutual funds? This is because funds reduce transaction costs and diversify portfolios for investors without the several commission charges that stocks need to bear (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have picked four such mutual funds that possess a Zacks Mutual Fund Rank #1 (Strong Buy), have positive year-to-date and 1-year returns, minimum initial investments within $5000 and low expense ratios.
Columbia Global Energy & Natural Resources A invests the majority of its assets in equity securities of U.S. and foreign companies engaged in the energy and natural resources industries. NREAX’s year-to-date and 1-year returns are 18.2% and 3.9%, respectively. EENAX has an annual expense ratio of 1.32%, which is lower than the category average of 1.40%.
Fidelity Select Energy (FSENX - Free Report) invests a large portion of its assets in securities of companies principally engaged in the energy field. FSENX’s year-to-date and 1-year returns are 25.3% and 9%, respectively. The fund’s annual expense ratio is 0.79%, lower than the category average of 1.40%.
Vanguard Energy Investor (VGENX - Free Report) invests a large portion of its assets in the common stocks of companies principally engaged in activities in the energy industry, such as the exploration, production, and transmission of energy or energy fuels. VGENX’s year-to-date and 1-year returns are 27.5% and 12.9%, respectively. It has an annual expense ratio of 0.37%, below the category average of 1.40%.
Columbia Global Energy & Natural Resources I invests a major portion of its assets in equity of U.S. and foreign companies engaged in the energy and natural resources industries. CERIX’s year-to-date and 1-year returns are 18.6% and 4.4%, respectively. The annual expense ratio of CERIX is 0.84%, lower than the category average of 1.40%.
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 >>