Investors looking for stable current income would do well to consider utility funds. These are used as defensive instruments, which protect investments during a market downturn. This is because the demand for essential services, such as those provided by utilities, remains unchanged even in difficult times.
In recent years, many funds in this category have increased their exposure to emerging markets and unregulated companies. Though this strategy has increased the risk involved, it has also generated higher returns.
Below we share with you three top-ranked utilities mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Virtus AllianzGI Water Fund Class A (AWTAX – Free Report) invests a bulk of its assets in common stocks and other equity securities of companies which are included in one or more of the S-Network Global Water Index (Composite), the NASDAQ OMX US Water Index, the S&P Global Water Index and the Global Water Index. The fund seeks capital growth for the long run by investing in companies involved in water-linked activities. AWTAX has three-year annualized returns of 17.4%.
As of the end of June 2021, AWTAX held 67 issues with 6.13% of its assets invested in Xylem Inc.
Cohen & Steers Global Infrastructure Fund, Inc. Class A (CSUAX – Free Report) aims for total return. It invests the lion’s share of its total assets in domestic as well as foreign common stocks and other equity securities that are issued by infrastructure companies, which consist of utilities, pipelines, toll roads, airports, railroads, marine ports, telecommunications companies and other infrastructure companies. CSUAX has three-year annualized returns of 8.9%.
Robert S. Becker is the fund manager of CSUAX since 2004.
Fidelity Select Utilities Portfolio (FSUTX – Free Report) seeks growth in capital. The fund invests the majority of its assets in securities of companies primarily involved in the utilities industry and companies deriving a large portion of their revenues from their utility operations. It has three-year annualized returns of 8.3%.
FSUTX has an expense ratio of 0.76% compared to the category average of 0.94%.
To view the Zacks Rank and past performance of all utility mutual funds, investors can click here to see the complete list of funds.
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 >>