Rising oil prices and higher Treasury yields are keeping the spotlight on inflation and interest rate policy. The CME Group’s FedWatch tool, measuring the market’s expectations for the Federal Reserve’s decision at the September FOMC meeting, has indicated a 92.5% probability of an increase in the Fed Funds Rate by 25 basis points.
As inflation and interest rates continue to command the attention of the markets, utility mutual funds can offer a relatively defensive posture in the equity market. As providers of essential services (i.e., electricity and natural gas) to households and businesses, the demand for utilities continues during different cycles of the economy. Investing in mutual funds focused on utilities, which offer diversification among stocks that are typically less volatile than other segments of the market, would be prudent. The dividend-paying profile of the sector offers additional advantages, such as boosting returns and cushioning portfolio performance during market volatility.
We have picked three utility mutual funds — Franklin Utilities FKUTX, Cohen & Steers Global Infrastructure CSUAX and American Century Utilities Inv BULIX — which investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), with positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Franklin Utilities fund invests most of its net assets in securities of public utilities companies, including providers of electricity, natural gas, water and communications services, as well as companies that provide services to public utilities.
John Kohli has been the lead manager of FKUTX since Dec. 31, 1998. Most of the fund’s holdings were in companies such as NextEra Energy, Inc. (9.4%), Entergy Corp (6.4%) and The Southern Co (5%) as of June 30, 2026.
FKUTX’s 3-year and 5-year annualized returns are 15.4% and 9%, respectively. Its net expense ratio is 0.71%. FKUTX 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.
Cohen & Steers Global Infrastructure fund invests in U.S. and non-U.S. infrastructure equities, including common and preferred stocks, convertibles, rights/warrants, equity units, IPOs and PIPEs, and may invest in infrastructure securities structured as REITs.
Benjamin Morton has been the lead manager of CSUAX since April 1, 2008. Most of the fund’s holdings were in companies such as NextEra Energy, Inc. (5.6%), The Williams Companies, Inc. (5.2%) and TC Energy Corp (5%) as of June 30, 2026.
CSUAX’s 3-year and 5-year annualized returns are 14.3% and 7.1%, respectively. Its net expense ratio is 1.21%. CSUAX has a Zacks Mutual Fund Rank #1.
American Century Utilities Inv fund invests its net assets in equity securities of companies engaged in the utilities industry. BULIX also invests in foreign and debt securities, and sells holdings when relative attractiveness, risk/return, or specific events change.
Yulin Long has been the lead manager of BULIX since Dec. 31, 2010. Most of the fund’s holdings were in companies such as NextEra Energy, Inc. (10.9%), Duke Energy Corp (7.6%) and The Southern Co (4.6%) as of June 30, 2026.
BULIX’s 3-year and 5-year annualized returns are 14.7% and 6.2%, respectively. Its net expense ratio is 0.66%. BULIX has a Zacks Mutual Fund Rank #1.
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 >>
View the Zacks #1 Rank List
Image: Bigstock
3 Utility Mutual Funds to Buy as Fed Rate Hike Looks Likely
Rising oil prices and higher Treasury yields are keeping the spotlight on inflation and interest rate policy. The CME Group’s FedWatch tool, measuring the market’s expectations for the Federal Reserve’s decision at the September FOMC meeting, has indicated a 92.5% probability of an increase in the Fed Funds Rate by 25 basis points.
As inflation and interest rates continue to command the attention of the markets, utility mutual funds can offer a relatively defensive posture in the equity market. As providers of essential services (i.e., electricity and natural gas) to households and businesses, the demand for utilities continues during different cycles of the economy. Investing in mutual funds focused on utilities, which offer diversification among stocks that are typically less volatile than other segments of the market, would be prudent. The dividend-paying profile of the sector offers additional advantages, such as boosting returns and cushioning portfolio performance during market volatility.
We have picked three utility mutual funds — Franklin Utilities FKUTX, Cohen & Steers Global Infrastructure CSUAX and American Century Utilities Inv BULIX — which investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), with positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Franklin Utilities fund invests most of its net assets in securities of public utilities companies, including providers of electricity, natural gas, water and communications services, as well as companies that provide services to public utilities.
John Kohli has been the lead manager of FKUTX since Dec. 31, 1998. Most of the fund’s holdings were in companies such as NextEra Energy, Inc. (9.4%), Entergy Corp (6.4%) and The Southern Co (5%) as of June 30, 2026.
FKUTX’s 3-year and 5-year annualized returns are 15.4% and 9%, respectively. Its net expense ratio is 0.71%. FKUTX 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.
Cohen & Steers Global Infrastructure fund invests in U.S. and non-U.S. infrastructure equities, including common and preferred stocks, convertibles, rights/warrants, equity units, IPOs and PIPEs, and may invest in infrastructure securities structured as REITs.
Benjamin Morton has been the lead manager of CSUAX since April 1, 2008. Most of the fund’s holdings were in companies such as NextEra Energy, Inc. (5.6%), The Williams Companies, Inc. (5.2%) and TC Energy Corp (5%) as of June 30, 2026.
CSUAX’s 3-year and 5-year annualized returns are 14.3% and 7.1%, respectively. Its net expense ratio is 1.21%. CSUAX has a Zacks Mutual Fund Rank #1.
American Century Utilities Inv fund invests its net assets in equity securities of companies engaged in the utilities industry. BULIX also invests in foreign and debt securities, and sells holdings when relative attractiveness, risk/return, or specific events change.
Yulin Long has been the lead manager of BULIX since Dec. 31, 2010. Most of the fund’s holdings were in companies such as NextEra Energy, Inc. (10.9%), Duke Energy Corp (7.6%) and The Southern Co (4.6%) as of June 30, 2026.
BULIX’s 3-year and 5-year annualized returns are 14.7% and 6.2%, respectively. Its net expense ratio is 0.66%. BULIX has a Zacks Mutual Fund Rank #1.
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 >>