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3 Mutual Funds to Buy as Dow Races Past 48,000 Points to Record Close
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Investors are regaining their confidence. Stocks rallied on Wednesday amid signs that the government shutdown is nearing its end, with the House of Representatives preparing to pass the Senate’s spending bill. Investors are also hopeful that the Federal Reserve may implement another rate cut in December.
The optimism helped push the Dow to a record close above 48,000 for the first time — marking the 30-stock index’s 17th all-time closing high of the year. Historically, the fourth quarter tends to be strong for stocks, which could give the Dow further momentum.
Amid this positive sentiment, investors may consider investing in utility funds like Franklin Utilities A1 Fund (FKUTX - Free Report) , Fidelity Telecom and Utilities (FIUIX - Free Report) and American Century Utilities Inv (BULIX - Free Report) .
Dow Hits New High
The Dow jumped 0.7% on Wednesday to close at a record high of 48,254.82 points. The jump was primarily driven by optimism that the 43-day government shutdown was coming to an end. The Senate approved a spending bill on Monday, sending it to the House for a final vote on Wednesday.
The longest government shutdown in U.S. history had deprived investors of key economic data, leaving them in the dark about the state of the economy. With the government gearing up to reopen this weekend, market participants expect clearer insights into the labor market, which has shown signs of contraction in recent months. Inflation data for September and October, also delayed, has made it difficult for investors to gauge the Fed’s future rate decisions.
Despite Chairman Jerome Powell’s hawkish remarks, markets are pricing in a 55.9% chance of a 25 basis point rate cut in December, according to the CME FedWatch Tool.
Even with the uncertainty and delayed Fed action over the past few weeks, the Dow has performed impressively. While technology stocks have been a major driver of the rally, investors have recently been shifting attention to economically sensitive sectors, as enthusiasm for AI stocks has cooled due to concerns about their high valuations.
3 Best Choices
We've identified three utility mutual funds that have demonstrated impressive annualized returns over 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy) or 2 (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).
Franklin Utilities A1 Fund seeks capital appreciation and current income. FKUTX invests at least 80% of its net assets in securities of public utilities. Franklin Utilities Fund invests more than 25% of its total assets in companies operating in the utilities industry. The manager expects more than 50% of the fund's assets to be invested in electric utilities securities.
FKUTX’s 3-year and 5-year annualized returns are 15.4% and 12.8%, respectively. Franklin Utilities A1 Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%, which is lower than its category average of 0.94%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Telecom and Utilities fund seeks high total return through a combination of current income and capital appreciation. FIUIX normally invests primarily in common stocks with at least 80% of assets in securities of utility companies.
FIUIX’s 3-year and 5-year annualized returns are 19.1% and 14%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.66%, which is lower than its category average.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
American Century Utilities Inv fund seeks current income and long-term capital growth. BULIX mainly invests 80% of its assets in stocks of companies engaged in the utilities industry. Within this 80% category, the managers will not buy shares of a company unless 50% or more of the company's revenues or net profits come from the ownership or operation of facilities used to provide electricity, natural gas, telecommunications services, cable television, water or sanitary services.
BULIX’s 3-year and 5-year annualized returns are 13.9% and 9.8%, respectively. American Century Utilities Invfund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.65%, which is lower than the category average of 0.87%.
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 Mutual Funds to Buy as Dow Races Past 48,000 Points to Record Close
Investors are regaining their confidence. Stocks rallied on Wednesday amid signs that the government shutdown is nearing its end, with the House of Representatives preparing to pass the Senate’s spending bill. Investors are also hopeful that the Federal Reserve may implement another rate cut in December.
The optimism helped push the Dow to a record close above 48,000 for the first time — marking the 30-stock index’s 17th all-time closing high of the year. Historically, the fourth quarter tends to be strong for stocks, which could give the Dow further momentum.
Amid this positive sentiment, investors may consider investing in utility funds like Franklin Utilities A1 Fund (FKUTX - Free Report) , Fidelity Telecom and Utilities (FIUIX - Free Report) and American Century Utilities Inv (BULIX - Free Report) .
Dow Hits New High
The Dow jumped 0.7% on Wednesday to close at a record high of 48,254.82 points. The jump was primarily driven by optimism that the 43-day government shutdown was coming to an end. The Senate approved a spending bill on Monday, sending it to the House for a final vote on Wednesday.
The longest government shutdown in U.S. history had deprived investors of key economic data, leaving them in the dark about the state of the economy. With the government gearing up to reopen this weekend, market participants expect clearer insights into the labor market, which has shown signs of contraction in recent months. Inflation data for September and October, also delayed, has made it difficult for investors to gauge the Fed’s future rate decisions.
Despite Chairman Jerome Powell’s hawkish remarks, markets are pricing in a 55.9% chance of a 25 basis point rate cut in December, according to the CME FedWatch Tool.
Even with the uncertainty and delayed Fed action over the past few weeks, the Dow has performed impressively. While technology stocks have been a major driver of the rally, investors have recently been shifting attention to economically sensitive sectors, as enthusiasm for AI stocks has cooled due to concerns about their high valuations.
3 Best Choices
We've identified three utility mutual funds that have demonstrated impressive annualized returns over 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy) or 2 (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).
Franklin Utilities A1 Fund seeks capital appreciation and current income. FKUTX invests at least 80% of its net assets in securities of public utilities. Franklin Utilities Fund invests more than 25% of its total assets in companies operating in the utilities industry. The manager expects more than 50% of the fund's assets to be invested in electric utilities securities.
FKUTX’s 3-year and 5-year annualized returns are 15.4% and 12.8%, respectively. Franklin Utilities A1 Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%, which is lower than its category average of 0.94%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Telecom and Utilities fund seeks high total return through a combination of current income and capital appreciation. FIUIX normally invests primarily in common stocks with at least 80% of assets in securities of utility companies.
FIUIX’s 3-year and 5-year annualized returns are 19.1% and 14%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.66%, which is lower than its category average.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
American Century Utilities Inv fund seeks current income and long-term capital growth. BULIX mainly invests 80% of its assets in stocks of companies engaged in the utilities industry. Within this 80% category, the managers will not buy shares of a company unless 50% or more of the company's revenues or net profits come from the ownership or operation of facilities used to provide electricity, natural gas, telecommunications services, cable television, water or sanitary services.
BULIX’s 3-year and 5-year annualized returns are 13.9% and 9.8%, respectively. American Century Utilities Invfund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.65%, which is lower than the category average of 0.87%.
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 >>