Mutual funds are an easy way for new investors to participate in the market because only a small amount of money is required to participate and they do not require any daily maintenance on the part of the investor. Funds have different investment strategies and purchase stocks and securities in different items, so an investor should not have difficulty finding the perfect one. The result will be an investment in a variety of stocks while also spreading risk.
Some mutual funds that focus on the energy sector invest in conventional energy sources like oil and natural gas, while others hold stocks in renewable energy companies. Investors should research the available funds and consult with an investment advisor as necessary. The best funds will provide diversification to the portfolio without exceeding the investor’s desired level of risk.
Vanguard Energy Fund is a commodity fund with a 14.81 percent ten-year return on an annualized basis. Though the commodities explosion has somewhat faded, energy prices are not forecasted to experience significant price drops during the long term. Population and inflation increases will only serve to make this fund more attractive.
Other top rated energy mutual funds expected to outperform the competition are BlackRock Energy & Resources, Ivy Energy A, Guinness Atkinson Global Energy, Waddell & Reed Energy A, and Fidelity Select Energy Service. Both Waddell and Fidelity seek long term strategy regarding capital growth. Waddell invests in both foreign and domestic conventional and alternative energy companies, while Fidelity invests in energy service companies. BlackRock puts its assets into natural resources and energy firms throughout the world. Ivy allocates a majority of assets to energy company securities. Guinness invests in between 25 to 75 domestic and foreign energy companies.
A good alternative energy fund is the New Alternative Fund, which invests in companies that are considered to be “green.” The fund focuses on renewable energy, alternative energy, environmental protection, and energy conservation. Rising traditional energy costs along with the popularity of the environmental movement have increased the popularity of this fund.
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