During difficult economic conditions, the demand for essential services such as utilities remains more or less constant. Since this category of funds protects investments during a downturn, they are viewed as a defensive choice, and have gained strength in current market conditions. They are also an excellent choice for investors seeking a steady income flow from consistent dividends yields. Investments in this sector are usually considered to be a conservative investment option. However, many utilities funds are now venturing into emerging markets and provide appreciably higher returns at relatively lower levels of risk.
Below we will share with you 5 top rated utilities mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all utilities funds, then click here.
American Century Utilities (BULIX - Free Report) seeks current income and capital appreciation. The fund invests the majority of its assets in securities listed on at least one index made up entirely of electricity, natural gas, cable television, water or sanitation services companies. The utilities mutual fund has a ten year annualized return of 6.06%.
Lynette Pang is the fund manager and he has managed this utilities mutual fund since 2010.
Invesco Utilities Investor (FSTUX - Free Report) invests a large share of its assets in stocks of companies in the utilities sector or related industries. Firms engaged in the production and distribution of gas and electricity as well as those providing telecom services constitutes its major investments. This utilities fund returned 13.81% over the last one year period.
The utilities mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.45% compared to a category average of 1.39%.
Vanguard Utilities Index Admiral Shares (VUIAX) seeks to track the performance of the MSCI U.S. Investable Market Utilities Index. This is index consists of companies in the utilities sector regardless of their market capitalization. The utilities mutual fund is non-diversified and has a three year annualized return of 11.22%.
As of September 2011, this utilities mutual fund held 86 issues, with 7.08% of its total assets invested in Southern Company.
ProFunds Utilities UltraSector (UTPIX - Free Report) invests in equity securities and derivatives that provide 150% of the daily return of the Dow Jones U.S. Utilities Index. The balance of the fund’s assets is utilized to purchase money market securities. The utilities mutual fund has returned 19.48% over the last one year period.
Hratch S. Najarian is the fund manager and he has managed this utilities mutual fund since 2011.
Franklin Utilities A (FKUTX - Free Report) seeks current income and capital growth. The fund concentrates on purchasing equity in public utilities companies and focuses on acquiring common stocks. More than 25% of its assets are invested in electricity, gas, water and communication services companies. The utilities mutual fund has a five year annualized return of 4.86%.
The utilities mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.78% compared to a category average of 1.39%.
To view the Zacks Rank and past performance of all utilities mutual funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at https://www.zacks.com/funds.