Oil prices have rebounded in recent times after major oil-producing nations agreed to cut their crude production. Moreover, a significant decline in U.S. crude inventories had a positive impact on oil prices. A stable domestic economy is also expected to boost overall crude demand. Recent recovery in oil prices pushed the energy sector northward.
So, mutual funds that have significant exposure to the energy sector could be solid investments. According to Morningstar, the energy mutual fund category has gained nearly 2.5% in the year-to-date frame. Mutual funds are better options while foraying into an industry as these reduce risks by holding a diversified portfolio.
Below we share with you three top-ranked energy mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future.
Fidelity Advisor Energy A (MUTF:FANAX) invests a major portion of its assets in securities of companies engaged in the energy field including the conventional areas of oil, gas, electricity and coal. FANAX seeks growth of capital. This non-diversified fund invests in both U.S. and non-U.S. companies. Fidelity Advisor Energy A has a one-year annualized return of 41.8%.
FANAX has an expense ratio of only 1.11% compared with the category average of 1.52%.
Prudential Jennison Natural Resources A (MUTF:PGNAX) seeks capital appreciation for the long run. PGNAX invests a bulk of its assets in equity securities natural resources companies. Natural resources companies are those that deal in mining, exploration, processing and developing of products and services with respect to natural resources. Prudential Jennison Natural Resources A has a one-year annualized return of 44.3%.
As of November 2016, PGNAX held 104 issues, with 4.85% of its assets invested in Halliburton Co. (NYSE:HAL).
Fidelity Select Natural Gas (MUTF:FSNGX) invests largely in companies whose primary operations are related to production, distribution and exploration of natural gas. It invests in common stocks of both U.S. and non U.S. companies. This non-diversified energy fund seeks long-term capital growth. Fidelity Select Natural Gas has a one-year annualized return of 61%.
Ted Davis is the fund manager of FSNGX since September 2012.