The rates that utilities charge customers and the profits the providers of water and power can make are highly regulated, but utilities’ stock gains have pushed the funds that focus on them to the No. 3 performing sector in the past 15 years as well as year to date.
A $ 10,000 investment in the average utility mutual fund on Sept. 30, 1999, would have grown to $ 28,940 by Nov. 10 this year, according to Morningstar Inc data.
That trails the $ 54,777 for the same investment in real estate funds and $ 48,335 for health care funds. But it tops the $ 21,143 from the S&P 500, a proxy for the broad stock market.
Franklin Utilities Funds’ has risen an average annual 9.93% the past 15 years vs. 6.69% for the average utility fund and 4.60% for the S&P 500. So far this year, investors in the $ 5.6 billion fund have seen a 23% gain vs. 18% for its peers and 12% for the S&P500.
Franklin Utilities’ recent holdings included Williams Cos. (NYSE:WMB), which is up 45% this year. Tulsa, Okla.-based Williams gathers, stores and transports natural gas. It’s riding the boom in oil and gas fracking. In June, Williams agreed to buy a controlling interest in Access Midstream Partners for nearly $ 6 billion.
The stock dipped 23% in October, falling briefly below its 40-week moving average line. But it has rallied 19% and has retaken its 10-week line.
Analysts expect the company’s earnings to grow 19% this year and 54% next year.