Surprise U.K. referendum results had weighed on key U.S. indexes last Friday. Markets were already tentative ahead of the historic poll which would determine Britain’s relationship with the E.U. Although, most opinion poll results were tilted toward the “Remain” camp, referendum results were in favor of a “Brexit”.

The sell-off that followed led to investors rushing for safe-haven sectors which emerged as a lucrative option. One such safe-haven sector is telecom. This sector mainly constitutes companies that provide television, telephone, computer networks and wireless services, and produces new software to enhance telecommunication services accessibility.

“Brexit” Shocks

Global growth concerns following speculation that the U.K. might leave the European Union had troubled the market over the past few weeks. Eventually, 51.9% Britain decided to leave the EU, narrowly beating the “remain” side that won 48.1% favor.

Following the referendum results, British Prime Minister David Cameron announced that he will resign by October. Cameron said that “British people have made a very clear decision to take a different path” and so “the country requires fresh leadership to take it in this direction.” Fears of Britain leaving the European Union weighed on risk-on trade and investors were left scampering for investments that would secure their portfolio.

Why Buy Telecom Mutual Funds?

Companies in this sector have the ability to generate stable returns for investors. Also, it is speculated that the U.S. telecommunications industry will witness reasonable growth throughout this year. This industry has lately emerged as an intensely contested space where success thrives largely on the quality of services, technical superiority and scalability.

Recently, the Federal Communications Commission (FCC), the U.S. telecom regulator, decided to vote on new rules to lay the groundwork for 5G network. The vote is scheduled to take place on Jul 14, 2016. Also, Internet TV is gradually gaining a strong foothold in the U.S. Moreover, next-generation superfast wireless networks (4G LTE, LTE-A, upcoming 5G) will provide the primary momentum to the telecom industry. Meanwhile, Internet of Things (IoT) is likely to be a key growth driver of the telecom sector. It is quickly gaining market traction and bringing about fundamental changes in business models.

Although cut throat competition persists in this industry, uninterrupted advancement in telecom technologies has helped companies to adopt better business models to boost revenues. Irrespective of market conditions, this sector continues to offer stable returns. Against this backdrop, investors seeking to tap the growth potential of the highly competitive telecom sector may think of investing in mutual funds that have significant exposure to it.

Buy These 4 Telecom Mutual Funds

We have selected four telecom mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging 3-year and 5- year returns. They also have minimum initial investment within $5000 and a low expense ratio.

We expect these funds to outperform their 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.

Fidelity Select Telecommunications Portfolio (FSTCX - MF report) seeks growth of capital. FSTCX invests more than 80% of its assets in securities of both domestic and foreign companies providing communication services. The fund has 3-year and 5-year returns of 9.5% and 8.9%, respectively, and an expense ratio of 0.81% as compared to the category average of 1.28%. FSTCX has a Zacks Mutual Fund Rank #1.

T. Rowe Price Media & Telecommunications (PRMTX - MF report) invests the lion’s share of its assets in securities of technology, media and telecommunications companies. PRMTX seeks capital appreciation over the long run. The fund has 3-year and 5-year returns of 12.6% and 13.4%, respectively, and an expense ratio of 0.79% as compared to the category average of 1.28%. PRMTX sports a Zacks Mutual Fund Rank #1.

Columbia Seligman Communications & Information A (SLMCX - MF report) seeks to achieve capital gains. The fund invests a major portion of its assets in securities of companies operating in the communications, information and related industries. The fund has 3-year and 5-year returns of 13.9% and 10%, respectively, and an expense ratio of 1.35% as compared to the category average of 1.42%. SLMCX has a Zacks Mutual Fund Rank #2.

Fidelity Advisor Telecommunications A (FTUAX - MF report) invests a bulk of its assets in securities of companies engaged in the manufacture and development of communication equipment. FTUAX seeks capital growth. The fund has 3-year and 5-year returns of 9.2% and 8.6%, respectively, and an expense ratio of 1.15% as compared to the category average of 1.28%. FTUAX carries a Zacks Mutual Fund Rank #1.