4 Utility Mutual Funds To Counter US-Sino Trade Spat

In such a gloomy scenario, investors must focus on companies that primarily offer services whose demand is unlikely to dampen. After all, not all sectors are exposed to trade tariffs or restrictive trade orders in the country.

This brings us to the utility sector.

Why Invest in Utility?

In times of market uncertainties, mutual funds that invest in utility companies are the best bets. First, utility companies are non-cyclical, which means that these never encounter diminished demand even in grim economic scenarios because of the nature of services they offer. After all, water, electricity and HVAC (heating, ventilation and air conditioning) are necessities one can’t do away with.

In fact, the Utilities Select Sector SPDR Fund (XLU), which climbed 2.9% in the past one month, is one of the four out of 11 sectors that gained in the same timeframe.

Now we come to the second-most vital question: 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.

4 Best Choices

We have selected four utility mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5,000.

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 Telecom and Utilities Fund (FIUIX - Free Report) aims for high total return by combining current income and capital growth. The fund mostly invests in common stocks of companies. It invests the majority of its assets in securities of telecommunications services organizations and utility companies. The non-diversified fund invests in U.S. and non-U.S. issuers alike.

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