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Oil prices are expected to continue with their gains as markets shed fears of an economic slowdown worldwide. Several encouraging factors such as Organization of the Petroleum Exporting Countries’ (OPEC) production cuts and favorable U.S.-China trade talks helped oil gain, but the former was the fundamental driver.
Therefore, it would be ideal to invest in energy mutual funds that could offer good returns this year.
Oil is Back in Bull Market
Oil entered bull market last week after gaining 20% from the low point in December. Brent crude oil rose above $61 a barrel and West Texas Intermediate (WTI) moved above $52.
Oil prices rose for the week ended Jan 11, with Brent Crude oil for March delivery rising 6% and WTI for February delivery increasing 7.6%.
Catalysts Behind Oil Price Jump
OPEC and its allies’ decision to cut oil output by 1.2 million barrels per day (bpd) in December is pushing oil prices up. The move was primarily to stop the oil market from sinking and sustain economies that are dependent on oil exports.
According to economic research firm TS Lombard, “Oil prices are likely to stabilize around current levels and quite possibly drift upwards.” The firm referred to OPEC and its allies’ oil production cuts as a major driver in boosting oil prices.
The last quarter of 2018 was marked by turbulence in global oil markets, largely driven by concerns over oversupply and declining demand. Oil prices slumped from October’s high of more than $86 per barrel to a little above $50 in recent times. Oil finally recovered in January after OPEC’s implementation of production cuts.
In addition, positive developments in U.S.-China trade discussions could boost oil prices as well, since it would help raise China’s oil demand.
Another factor that could play a role in raising oil prices is International Maritime Organization’s (IMO) regulations that are set to take effect from 2020. The regulation will cease the usage of light oil as marine fuel and prompt the usage of heavy distillates in a bid to reduce pollution. U.S. shale oil being light may not be able to boost oil prices once IMO’s regulation kicks in. In such a scenario, OPEC’s supply cuts will have more driving effect on global oil prices.
4 Energy Mutual Fundsto Gain From Oil Rally
According to Morgan Stanley analysts Martijn Rats and Amy Sergeant, “The oil market looks to be broadly balanced in 2019, an improvement on 2018 which turned out oversupplied.” They added, “This supports a partial oil price recovery.”
Given the factors pushing oil prices up and Morgan Stanley’s optimistic projections for oil markets, adding a couple of energy stocks to your portfolio could be apt at present.
We have, thus, selected four energy mutual funds that can make the most of this rise in oil prices. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and 2 (Buy). Moreover, these funds have encouraging three-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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).
Vanguard Specialized Portfolios Energy Fund (VGENX - Free Report) seeks long-term capital growth by primarily investing 80% of its net assets in stocks of companies engaged in the energy sector. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VGENXhas an annual expense ratio of 0.38%, which is below the category average of 1.36%. The fund has three-year returns of 4.39%.
Rational Tactical Return Fund Institutional Shares (HRSTX - Free Report) seeks long-term capital growth by primarily investing in long and short call and put options on futures contracts on S&P 500 index and in cash and cash equivalents. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
HRSTXhas an annual expense ratio of 1.17%, which is below the category average of 1.48%. The fund has three-year returns of 6.82%.
Dreyfus Natural Resources Fund Class I (DLDRX - Free Report) seeks long-term capital growth by investing 80% of its net assets in securities of companies that operate in natural resources or related sectors. The fund carries a Zacks Mutual Fund Rank #2.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
DLDRXhas an annual expense ratio of 1.00%, which is below the category average of 1.41%. The fund has three-year returns of 6.38%.
Dreyfus Natural Resources Fund Class A (DNLAX - Free Report) seeks long-term capital growth by investing 80% of its net assets in securities of companies in natural resources or related sectors. The fund carries a Zacks Mutual Fund Rank #2.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
DNLAXhas an annual expense ratio of 1.28%, which is below the category average of 1.41%. The fund has three-year returns of 6.08%.
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4 Best Energy Mutual Funds to Buy in 2019
Oil prices are expected to continue with their gains as markets shed fears of an economic slowdown worldwide. Several encouraging factors such as Organization of the Petroleum Exporting Countries’ (OPEC) production cuts and favorable U.S.-China trade talks helped oil gain, but the former was the fundamental driver.
Therefore, it would be ideal to invest in energy mutual funds that could offer good returns this year.
Oil is Back in Bull Market
Oil entered bull market last week after gaining 20% from the low point in December. Brent crude oil rose above $61 a barrel and West Texas Intermediate (WTI) moved above $52.
Oil prices rose for the week ended Jan 11, with Brent Crude oil for March delivery rising 6% and WTI for February delivery increasing 7.6%.
Catalysts Behind Oil Price Jump
OPEC and its allies’ decision to cut oil output by 1.2 million barrels per day (bpd) in December is pushing oil prices up. The move was primarily to stop the oil market from sinking and sustain economies that are dependent on oil exports.
According to economic research firm TS Lombard, “Oil prices are likely to stabilize around current levels and quite possibly drift upwards.” The firm referred to OPEC and its allies’ oil production cuts as a major driver in boosting oil prices.
The last quarter of 2018 was marked by turbulence in global oil markets, largely driven by concerns over oversupply and declining demand. Oil prices slumped from October’s high of more than $86 per barrel to a little above $50 in recent times. Oil finally recovered in January after OPEC’s implementation of production cuts.
In addition, positive developments in U.S.-China trade discussions could boost oil prices as well, since it would help raise China’s oil demand.
Another factor that could play a role in raising oil prices is International Maritime Organization’s (IMO) regulations that are set to take effect from 2020. The regulation will cease the usage of light oil as marine fuel and prompt the usage of heavy distillates in a bid to reduce pollution. U.S. shale oil being light may not be able to boost oil prices once IMO’s regulation kicks in. In such a scenario, OPEC’s supply cuts will have more driving effect on global oil prices.
4 Energy Mutual Fundsto Gain From Oil Rally
According to Morgan Stanley analysts Martijn Rats and Amy Sergeant, “The oil market looks to be broadly balanced in 2019, an improvement on 2018 which turned out oversupplied.” They added, “This supports a partial oil price recovery.”
Given the factors pushing oil prices up and Morgan Stanley’s optimistic projections for oil markets, adding a couple of energy stocks to your portfolio could be apt at present.
We have, thus, selected four energy mutual funds that can make the most of this rise in oil prices. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and 2 (Buy). Moreover, these funds have encouraging three-year returns. Additionally, the minimum initial investment is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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).
Vanguard Specialized Portfolios Energy Fund (VGENX - Free Report) seeks long-term capital growth by primarily investing 80% of its net assets in stocks of companies engaged in the energy sector. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
VGENXhas an annual expense ratio of 0.38%, which is below the category average of 1.36%. The fund has three-year returns of 4.39%.
Rational Tactical Return Fund Institutional Shares (HRSTX - Free Report) seeks long-term capital growth by primarily investing in long and short call and put options on futures contracts on S&P 500 index and in cash and cash equivalents. The fund carries a Zacks Mutual Fund Rank #1.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
HRSTXhas an annual expense ratio of 1.17%, which is below the category average of 1.48%. The fund has three-year returns of 6.82%.
Dreyfus Natural Resources Fund Class I (DLDRX - Free Report) seeks long-term capital growth by investing 80% of its net assets in securities of companies that operate in natural resources or related sectors. The fund carries a Zacks Mutual Fund Rank #2.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
DLDRXhas an annual expense ratio of 1.00%, which is below the category average of 1.41%. The fund has three-year returns of 6.38%.
Dreyfus Natural Resources Fund Class A (DNLAX - Free Report) seeks long-term capital growth by investing 80% of its net assets in securities of companies in natural resources or related sectors. The fund carries a Zacks Mutual Fund Rank #2.
This Zacks sector – Energy product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
DNLAXhas an annual expense ratio of 1.28%, which is below the category average of 1.41%. The fund has three-year returns of 6.08%.
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 >>