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3 Utility Funds to Bet on Amid Sinking Consumer Sentiment
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Inflation has resumed its climb again and consumers’ confidence, which till some time back was high, has dented. Concerns over the economy’s health and future have once again flared up.
The University of Michigan’s preliminary report on the overall index of consumer sentiment came up with a reading of 77.9 in April compared with the final reading of 79.4 in March.
The consumer's expectation index for inflation over the next one-year period jumped to 3.1% in April from 2.9% in the prior month. Moreover, the outlook for inflation over the next five years also rose to 3% in April from 2.8% in March.
The consumer price index (CPI) climbed 0.4% sequentially in March and 3.5% from the year-ago levels, which were both higher than the consensus estimates. Inflation has now increased in the first three months of the year after falling below 3% at the end of 2023.
Although inflation declined sharply from its 40-year high of 9.1% in 2022, it remains a lot higher than the Federal Reserve’s 2% target.
The minutes of the Federal Reserve’s March FOMC meeting show that officials remain concerned that inflation isn’t declining at a fast pace, which could delay the central bank’s planned rate cuts.
The Fed plans three rate cuts of quarter percentage points each this year but is still undecided about the timing of the first of the rate cuts.
Fears of a delay in rate cuts are also adding to the growing concerns, which is further denting consumer sentiment.
Amid the current conditions, utility mutual funds present essential stability and growth potential, making them a prudent consideration for savvy investors.
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), 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).
Fidelity Select Utilities (FSUTX - Free Report) fund seeks capital appreciation. FSUTX normally invests at least 80% of assets in common stocks of companies principally engaged in utilities and companies deriving the majority of their revenues from utility operations.
FSUTX’s 3-year and 5-year annualized returns are 8.2% and 7.9%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.74%.
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 (BULIX - Free Report) 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 1.8% and 2.8%, respectively. American Century Utilities Invfund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.66%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Franklin Utilities Fund (FKUTX - Free Report) seeks capital appreciation and current income. FKUTX invests at least 80% of its net assets in the securities of public utilities companies. Franklin Utilities Fund invests more than 25% of its total assets in companies operating in the utilities industry. The manager expects that more than 50% of the fund's assets will be invested in electric utilities securities.
FKUTX’s 3-year and 5-year annualized returns are 5.2% and 5.8%, respectively. Franklin Utilities Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%.
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 Utility Funds to Bet on Amid Sinking Consumer Sentiment
Inflation has resumed its climb again and consumers’ confidence, which till some time back was high, has dented. Concerns over the economy’s health and future have once again flared up.
The University of Michigan’s preliminary report on the overall index of consumer sentiment came up with a reading of 77.9 in April compared with the final reading of 79.4 in March.
The consumer's expectation index for inflation over the next one-year period jumped to 3.1% in April from 2.9% in the prior month. Moreover, the outlook for inflation over the next five years also rose to 3% in April from 2.8% in March.
The consumer price index (CPI) climbed 0.4% sequentially in March and 3.5% from the year-ago levels, which were both higher than the consensus estimates. Inflation has now increased in the first three months of the year after falling below 3% at the end of 2023.
Although inflation declined sharply from its 40-year high of 9.1% in 2022, it remains a lot higher than the Federal Reserve’s 2% target.
The minutes of the Federal Reserve’s March FOMC meeting show that officials remain concerned that inflation isn’t declining at a fast pace, which could delay the central bank’s planned rate cuts.
The Fed plans three rate cuts of quarter percentage points each this year but is still undecided about the timing of the first of the rate cuts.
Fears of a delay in rate cuts are also adding to the growing concerns, which is further denting consumer sentiment.
Amid the current conditions, utility mutual funds present essential stability and growth potential, making them a prudent consideration for savvy investors.
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), 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).
Fidelity Select Utilities (FSUTX - Free Report) fund seeks capital appreciation. FSUTX normally invests at least 80% of assets in common stocks of companies principally engaged in utilities and companies deriving the majority of their revenues from utility operations.
FSUTX’s 3-year and 5-year annualized returns are 8.2% and 7.9%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.74%.
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 (BULIX - Free Report) 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 1.8% and 2.8%, respectively. American Century Utilities Invfund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.66%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Franklin Utilities Fund (FKUTX - Free Report) seeks capital appreciation and current income. FKUTX invests at least 80% of its net assets in the securities of public utilities companies. Franklin Utilities Fund invests more than 25% of its total assets in companies operating in the utilities industry. The manager expects that more than 50% of the fund's assets will be invested in electric utilities securities.
FKUTX’s 3-year and 5-year annualized returns are 5.2% and 5.8%, respectively. Franklin Utilities Fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%.
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 >>