Even during a market downturn, the demand for essential services such as those provided by utilities, remains virtually unchanged. Utilities funds are therefore an excellent choice for investors seeking a steady income flow through consistent yields from dividends. This is also why they are primarily considered to be a relatively more conservative investment option. In recent times their forays into emerging markets have led to appreciably higher returns and they offer superior returns at a relatively lower level of risk.

Below we will share with you 3 top rated utilities mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all utilities funds, investors can click here to see the complete list of funds.

Fidelity Select Utilities Portfolio (FSUTX - MF report) seeks capital growth over the long run. The fund invests a lion’s share of its assets in common stocks of companies primarily involved in utilities sector, and companies that derive major portion of its revenue from operations related to this sector. The fund invests in both U.S. and non-U.S. firms. The fund considers factors such as financial strength and economic condition to invest in companies. The non-diversified utilities mutual fund has a three year annualized return of 17.8%.

The utilities mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.80% compared to a category average of 1.28%.

Fidelity Advisor Utilities A (FUGAX - MF report) invests a major portion of its assets in utilities companies or carryout operations related to the utilities industry. Factors such as industry position and market condition are considered to invest in companies throughout the globe. The fund seeks long term capital growth. The non-diversified utilities mutual fund has a three year annualized return of 16.9%.

The fund manager is Douglas Simmons and he has managed this utilities mutual fund since 2006.

Fidelity Telecom and Utilities (FIUIX - MF report) seeks total return with current income and capital growth. It invests heavily in companies from telecommunications services and utilities sector. The fund invests in companies all over the globe by analyzing factors which include company’s economic condition and financial strength. The non-diversified utilities mutual fund has a three year annualized return of 15.4%.

As of October 2014, this utilities mutual fund held 36 issues, with 19.96% of its total assets invested in Verizon Communications Inc (VZ).